Title| Online Study Solutions

SRH Hochschule Hamm

Research Paper

Summer Semester 2019

Supervisor: Prof. Sarah Grenzler

TOPIC – Importance Of Communication In Merger And Acquisitions

Name

Tejas Dalvi

Street

Ahlener str. 90

City

59073 Hamm

Matriculation

number

3401314

Semester

1

E-Mail

tejas8dalvi@gmail.com

I

Table of Contents

Table of Contents …………………………………………………………………………………… I

Abstact ………………………………………………………………………………………………… II

1. Introduction …………………………………………………………………………………. 3

1.1.Problem statement ………………………………………………………………………… 4

2. Literature ……………………………………………………………………………………. 5

2.1. Definitions ………………………………………………………………………………… 5

2.2. Communication and change management …………………………………….. 6

2.2.1. Change Management …………………………………………………………… 6

2.2.2. Strategies For Communicating Change …………………………………… 7

2.3. Communication And Conflict management ……………………………………. 8

2.3.1 Conflict Management…………………………………………………..8

2.3.2 Strategies For Communicating Conflict………………………………9

2.4 Communication And Management Of Corporate culture………………….10

2.4.1 Corporate Culture………………………………………………………10

2.4.2 Strategies For Communicating Corporate Culture………………….13

3. Conclusion ………………………………………………………………………………… 15

List Of References ……………………………………………………………………………….. 17

List of Figures ……………………………………………………………………………………… 19

Declaration of Own Work………………………………………………………………………. 20

II

Abstract

Over the years world has witnessed many mergers & acquisitions. Whenever the

idea of merger or acquisition is proposed to shareholders it is presented as a strategy

for wealth creation. However, the statistics shows that number of mergers or acquisition

actually achieving ‘success’ is comparatively low. Mergers and acquisition fail to

recognise the importance of communicating with existing employees. Knowledge and

feelings of employees, together with other integration techniques can impact overall

success of mergers and acquisition. The literature suggests that post-acquisition

integration of M&As is the phase where expectations are fulfilled or broken and where

there is potential for employee motivation to reduce dramatically.

Beginning with an introduction of topic and presentation of related issues.

Leading to a problem statement a concrete objective for the report has been established

and presented. Subsequently, the theoretical framework and foundation for the report is

presented, accounting for various theorists, fields, and concepts and how these will

contribute to an achievement of the report’s main objective. Representing the foundation

of the theoretical framework, structure Communication by Katherine Miller are going to

be frequently applied and said, as her work spans over a large vary of topics and fields,

all being relevant to the report. other than this main supply of theoretical resources, a

large vary of theorizer, academics, professional, and business professionals are going

to be enclosed so as to confirm that each connected subject are going to be coated. With

the topic being management communication, 3 subcategories square measure proposed

so as to supply structure and summary of the excellent topic.

Resource material with change management, conflict management and

corporate culture is well examined to give brief idea about all three. Then the strategies

to communicate all these are explained.

Finally, an evaluation of the entire report, including all its phases and findings will

lead to a conclusion, answering the research question posed in the problem statement.

Introduction

3

1. Introduction

When observing the field of business with special focus on past 30 years, it is evident

that the world has become significantly smaller, in the sense that people’s perception of

space, human capabilities, and what is actually achievable has changed. Rather than

regarding distances and differences as obstacles and hindrances, today these are often

considered as a presenting possibilities and opportunities. Globalism has affected the

business world so that rather than being active in “only” in one or few markets global

presence is seen as clear advantage. This development has led to fierce competition. In

order to keep up with competitors many organisations throughout the world are using

various tools like outsourcing, value chain optimisation and corporate venturing.

However, it seems that in past 30 years one trend has spread more wider and faster than

all of the others.

If we study the development of Mergers & Acquisitions

1

since 1980s industrial

reconstruction activities have raised important issues in terms of business decisions. No

firm is regarded safe from takeover possibility. M&A is clearly a popular choice in today’s

business environment (Mitleton-Kelly, 2006). Exxon‐Mobil, Sony‐Ericsson, and Time

Warner‐AOL are example of many companies who have decided to explore business

opportunities, growth and success through corporate collaborations and considering the

engaging parties’ underlying motives, it is recognisable how factors like; synergy,

economies of scale, market expansion etc. is appealing and thus cause them to

undertake this form of organisational behaviour. But not every M&A is successful. In fact,

more than half M&A prove financially unsuccessful.12 Statistics taken from IBM (2000),

show that only 37% of acquisitions are considered to be ‘very successful’, in the eyes of

the companies undergoing the process; this suggests that reality often falls short of the

ideal. Furthermore, studies indicate that the overall reason for the relatively high failure

rate of M&A activities is the lack of one very important, however often forgotten, factor –

communication. More specifically, it is management’s lack of open, clear, and

unambiguous communication that creates the issue and too often causes organisations

to “break up” and thus leave the merger unsuccessfully (Valant, 2008).

1

Mergers & Acquisitions will be referred to as M&As through the report.

4

Despite having access to all the data and information, why is it that success rate of

M&A is still not improving and moreover how does managers apply all this available

information to make M&A successful.

Considering the fact that M&A is the most common choice above all of high-level

transaction‐specific investment, it is necessary to do thorough analysis of this poor

development of M&As and the influence of effective communication, so managers can

approach such a situation in the right manner and thus become successful.

1.1 Problem Statement

The overall purpose of this report is to highlight the importance of communication in

M&A situation and what steps should management take in order to establish the

right prerequisites for a successful outcome? Answer to this question will help reach

better overview and understanding of importance of communication and how manger

could approach M&A.

5

2. Literature

2.1 Definitions

Merger is the aggregation of two or more firms which results in continuous

function of one firm.1 A merger is a unification of two businesses where one exists

and the other moves out of business.2 All the liabilities and assets of merged

company are taken care by acquiring company.

An acquisition occurs when one company takes a controlling ownership interest

in another firm, a legal subsidiary of another firm, or selected assets of another firm

such as a manufacturing facility.3 Difference between merger and acquisition is given

in the Table 1.

Table 1: The difference between Mergers and acquisition

Basis

Mergers

Acquisition

Meaning

Voluntary fusion of

companies to form a new

company

One firm purchases the

business of another firm.

New company formation

Yes

No

Nature of decision

Mutual decision

Friendly and hostile decision

Minimum. number of

companies

3

2

Purpose

To increase operational

efficiency and to decrease

competition

Immediate growth

Business Size

More or less same

Bigger than the size of the

acquired company

Legal Formalities

More

Less

2.2 Communication and Change Management

2.2.1 Change Management

Change is constant, inevitable and will always affect the people’s lives in one way

or other. While some people welcome it with open arms and with curious, positive mind

some people are very reluctant towards change. One of the factors that for many people

cause the negative conception of the concept is that change not always can be controlled

or planned, which leaves them with a feeling of uncertainty and anxiety.4 Having different

outlooks towards change is what makes the communicating change a comprehensive

challenge for all managers. As much as rewarding it can be if done successfully; it can

be as much damaging if not regarded as a high priority task. Key reason for any manger

to consider devoting time and energy in communicating change.

Having said that change inevitable, to get benefited from change it must be well

planned by management. According to K. Miller (2006:220), planned change is well

prepared, thought through, and has a deeper meaning to it and rather than just letting

the “organisational life cycle” take its course, organisations should strive to manage

change. Planned change is long term process which eventually demands superior