Professional Documents
Culture Documents
Merger process
Steps in Merger
3. Approval of proposal by Board of DirectorsDeciding upon the considerations of the deal and terms of payments, the proposal will be put for the Board of Directors approval.
4. Approval of share holdersAs per the provisions of the Companies Act 1956 the shareholders of both seller and the acquirer companies hold meeting under the directions of the National Company Law Tribunal and consider the scheme of amalgamation. A separate meeting for both preference and equity shareholder is convened for this purpose.
5. Approval of creditors/financial institutions/banksApprovals from all these are to be sought for as per the respective agreement with each of them and their interest are considered in drawing up the scheme of merger.
6. Tribunals approval: Is required for confirming the scheme of amalgamation. The Tribunal shall issue orders for winding up of the amalgamating company without dissolution on receipt of the reports from the official liquidator and Regional Director that the affairs of the amalgamating company have not been conducted in a manner prejudicial to the interest of its members or to public interest.
7. Approval of Central Government:is required on the recommendation made by the specified authority under Sec 72A of the Income Tax Act, if applicable 8 Integration stage: the structural and cultural aspects of the two organizations, if carefully integrated in the new organization, will lead to successful merger and ensure that expected benefits of the merger are realized.
Post-Acquisition Audit
Corporate strategy
Post-Acquisition Integration
STAGE 3
Business strategy is concerned with ways of achieving, maintaining, or enhancing competitive advantage in product markets. Corporate strategy is concerned with ways of optimizing the portfolios of business that a firm currently owns & with how this portfolio can be changed to serve the interests of the corporations stakeholders.
M & A is one such activity which achieves the objectives of both corporate and business strategies.
One of the major reasons for the observed failure of many acquisitions may be that firms lack the organization of resources and capabilities for making acquisitions. It is also likely that the acquisition decision-making processes within firms are far from the models of economic rationality that one may assume. Success for effective acquisition integration is determined at least partly by the thoroughness, clarity and forethought with which the value creation logic in blueprinted at the acquisition decision stage.
4.Post-Acquisition Integration
This is a very important stage, the objective of which is to put in place a merged organization that can deliver the strategic and value expectations that drove the merger in the first place. Integration has the characteristics of a change mgt programme but here three types of change may be involved: Change of the target firms Change of the acquiring firms Change in the attitude and behavior of both to accommodate co-existence or fusion of the two firms.
The importance of organizational learning to the success of future acquisitions needs much greater recognition, given the high failure rate of acquisitions. Post merger audit by internal auditors can be acquisition specific as well as being part of an annual audit. Internal auditors have a significant role in ensuring organizational learning and its dissemination.
Give people some time for adjustment. During this period take up follow-up action to:
Initiate many goodwill measures Communicate well to quell rumors Build Trust Create a vision / image for the combined firm
Maintain and improve the level of morale & motivation of the employees
In this stage, attempts are made to create a homogeneous company with no trace of erstwhile companies. For this, the leadership role needs to be redefined into one with a clear vision for the future. Thus, this stage seeks to create not a union of multiple organizations but a single organization with one culture and one unique way of doing things.
Challenges in M&A
1. Challenges in competitive strategy planning 2. Challenges in organizing for acquisitions 3. Challenges in deal structuring and negotiation. 4. Challenges in post merger acquisition integration 5. Challenges in post-acquisition audit and organizational learning
Challenges in M&A