Book
by Bernardo Javalquinto Lagos (Author)

Light Manual For STRATEGIC MANAGEMENT AND LEADERSHIP CONCEPTS IN MERGERS & ACQUISITIONS: A SOCIAL BUSINESS VISION Kindle Edition

Burgess COMMENTARY

Peter Burgess

Light Manual For STRATEGIC MANAGEMENT AND LEADERSHIP CONCEPTS IN MERGERS & ACQUISITIONS: A SOCIAL BUSINESS VISION Kindle Edition by Bernardo Javalquinto Lagos (Author) Be the first to review this item Hide other formats and editions Price New from Used from Kindle, Kindle eBook, October 10, 2015 $2.99 — — I. EXECUTIVE SUMMARY HAVE YOU EVER WONDERED WHY ONLY 10% OF M & AS ARE REALLY SUCCESSFUL? A Successful Merger and Acquisition (M&As) seems to be the magic answer to the globalization of the economy. Every day new business operations of this nature are announced in newspapers all over the world. However, in the HBS Magazine the article The Big Idea: The New M&A Playbook, by Clayton M. Christensen, Richard Alton, Curtis Rising, and Andrew Waldeck “when a CEO wants to boost corporate performance or jump-start long-term growth, the thought of acquiring another company can be extraordinarily seductive. Indeed, companies spend more than $2 trillion on acquisitions every year. Yet study after study puts the failure rate of mergers and acquisitions somewhere between 70% and 90%. A lot of researchers have tried to explain those abysmal statistics, usually by analyzing the attributes of deals that worked and those that didn’t. What’s lacking, we believe, is a robust theory that identifies the causes of those successes and failures.” And only 10% of the M&As are successful. This means that, in most of the cases, when you add 1 plus1 is not equal to 2, but 1, 5. Studies of numerous cases of M&As have shown that the formula of success is made up of, at least, three basic fundamental factors. First, you have to think about the strategic vision that you will have with this new entity and of the value added that will contribute to this new merger. Second, choose the best similarities of the different cultures that shared same or similar values and that will make or empower your organization. Finally, make the integration process to be well managed. This last statement is very delicate. Because if you think carefully the value of a company is changing from the tangible value factors in the past to intangible factors, that are appearing to be extremely valuable, e.g., the clients and the personnel. Of course, those are obviously the ones that we don't buy. We should change our way of thinking and we should convince them that the merger will be profitable for them; otherwise, they simply leave and or are fired because they create chaos in the process and leads to the destruction of value of the company. The integration is not a mere arithmetic operation, but rather it requires, to be very careful, and especially to have tact in order to avoid a rupture between the winning assumptions and the presumed losers. The first step is to define who will be the 'Architect of the Merger' and quickly clarify the situation to the top management level, to avoid the concern of a future stagnation in the main level of executives of the company. The decisions taken should be objective and applied with judgment in order not to generate a 'war of clans.' Also, it means to constitute a mixed and quite balanced team that will really do the job for you 'all the way, just for the success of the merger.” The next step is defining the rules of the game clearly, where the fairness and impartiality of the Architect is completely reliable, with no question, whatsoever. At the same time, during the whole process is required a good plan of communication, without it, the field is left free for all kind of speculations and uncertainty. The speech should be coherent with the acts and vice versa. The management team should define their plan of action quickly and put it in progress immediately, in order to avoid deception and the risk of being left in the middle of road. The biggest problem is that all the energy could be absorbed solving internal problems of the M&As. If this happen, it is possible that when you lose control of the administration and of the business, this will create a great benefit for the competitors. So, in order to completely successful, the merger cannot be a mere absorption of one company to another. On the contrary, the result should be “in the creation of a new entity that arises with their own culture that emerges with the ....