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Non HE Literature on Mergers


Journal and other articles


Nine Steps to Prevent Merger Failure

Gerald Adolph, Karla Elrod, and J. Neely. Harvard Business School, Working Knowledge for Business Leaders. (2006)

There are some transactions, such as the marriage of HP and Compaq, that are troubled from the start. There's little anyone can do. Fortunately, this is far from the norm. More than two-thirds of transactions that fail do so at the execution stage. DaimlerChrysler, for example, neglected early on to establish a proper set of guiding principles based on the merger's strategic intent, and then continued to misfire by failing to align leadership and integrate the cultures of the two organizations. Is there a lesson in this? Absolutely. Execution-related failures can be avoided. To do so, you need to establish a program integration team early in the process that can respond to the execution risks inherent in all transactions. We call these risks the "nine deadly sins." Understanding them is a critical first step toward a successful merger.

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Leadership in a post-merger context. The importance of people skills over politics

Mariëlle G. Heijltjes, Hanneke S. ter Velde Maastricht University, the Netherlands. (2005)

Drawing on the merger and CEO succession literature as well as on findings from research on organizational change, this study examines what leadership issues drive success in a postmerger context. Data from 45 recently merged units within a cooperative bank in Europe indicate that the people skills of the newly appointed top manager matter most. Specifically, his/her integration ability followed by the ability to positively influence the internal working environment are significantly correlated with post-merger success. Politics in terms of whether the top manager had a track record inside or outside the organization did not appear to be important.

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Getting It Together. The Leadership Challenge of Mergers and Acquisitions

Paper produced for the Centre for Creative Leadership by by Günter K. Stahl. Adapted from an article first published in the INSEAD Quarterly, July 2004, no. 8

The literature on mergers and acquisitions indicates that failure rates typically range from 50 to 70 percent or even higher. A Business Week study of megamergers conducted between 1998 and 2000 found that in more than 60 percent of the cases, shareholder value was destroyed. Why do so many corporate combinations that looked like such great opportunities end up in disaster? Recent research suggests that contrary to common belief, it is not poor strategic fit that most often causes mergers and acquisitions to fail but poor execution. The errors can be seen, for example, in instances of insensitive management, lack of trust building and communication, slow execution, power struggles, or a lead-ership vacuum following the deal.

Research on alliances shows by and large a similar pattern. Even with this kind of information, most corporate combinations still place special emphasis on the strategic and financial goals of the transaction, whereas the cultural and people implications rarely receive as much attention. To gain some insight into what sets winning corporate combinations apart from the rest and the leadership challenges involved in integrating organizations, this report is based on interviews with Carlos Ghosn, the president and CEO of Nissan, who in April 2005 is to become president and CEO of Renault (which owns 44 percent of Nissan), and Jean-Pierre Garnier, executive director and CEO of GlaxoSmithKline (GSK).

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Leadership development as a vehicle for change during merger

Angela Hyde; James Paterson Journal of Change Management, Volume 2, Issue 3, pages 266 - 271 (September 2001)

Astra and Zeneca merged in 1999 to form AstraZeneca, one of the top five pharmaceutical companies in the world. This paper looks at the role that new leadership development programmes played in supporting cultural integration. Three new global, cross-functional leadership development programmes are described, outlining how the objectives, design and style of the programmes supported the merger effort. Outcomes from the programmes are discussed as well as the broader lessons that have been learned; the key ones being the importance of managing change proactively, the need to have clear objectives that are aligned with the company's strategic objectives and that also meet the needs of the participants and, crucially, maintaining senior management support.

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Successful Post-Merger Integration: Realizing the Synergies

Nils Bohlin, Eliot Daley, and Sue Thomson

The question is, why do mergers and acquisitions work for some and not for others? The answers are of course complex. Mergers and acquisitions vary widely along a number of dimensions: company size and diversity; industry characteristics; overlap of products, markets, and customers; prior mergers and acquisitions experience of the parties; whether the takeover was hostile or friendly; relative performance strength of the acquired firm; and how much assimilation is desired or required.

Despite this variety and complexity, we suggest that those that fail share one critical blind spot: they treat “synergy creation and exploitation” as a euphemism for cost-cutting. By focusing too exclusively on costs, they minimize – or defer until too late – the human and cultural dimensions of blending two entities into one seamless, growth-oriented business. After all, organizations are basically collections of people sharing a common purpose, one or more locations, and other resources such as money, equipment, and common processes. Still, many business managers persist in believing that the latter assets are the ‘real’ organization, while the people are only the ‘soft side’ of the equation. But how ‘soft’ are the people issues if they can bring an otherwise ‘perfect’ merger-integration effort to its knees – as evidenced in recent press coverage of major transatlantic mergers in the pharmaceutical industry. A recent Forbes 500 study asked CEOs why merger synergies are not achieved: first in their list of ‘failure factors’ was ‘incompatible cultures’ and three of the top six factors were culture-related.

In this article we examine the human and cultural aspect of the merger experience and suggest a process and key principles with which companies involved in mergers or acquisitions can greatly increase the odds of creating an organization capable of synergistic growth.

The article also suggests the process of bringing two companies together follows six generic phases that can be grouped into three stages: pre-merger planning, merger, and post-merger integration.

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