An Analysis Of The Planning For Mergers & Acquisitions And The Assimilation Process

With today's world of well-developed communication, we can almost hear everyday news of merger and acquisition from around the world of various industries. These news trigger an increase in company's stock prices. Just these couple of days, the following news occurred:(1) Microsoft may acquire Yahoo. This piece of information stimulated Yahoo's stock price on 5/4/07 to increase 10%.(2) Dow Jones' stock price rose from 35 USD to 60 USD, an increase of over 40% in a day (5/4/07), due to Rubert Murdoch bid of 5 billion USD for Dow Jones & Co., the company that publishes The Wall Street Journal.From the above, we can see that corporations' operations or market share are challenged by external factors. Merger and acquisition becomes a method for a company's survival or continuous development. In addition, merger and acquisition has the following attributes:■It is a major force that pushes the economy forward;■It allows rapid growth in size of a company and increases a company's market share;■It increases the competitiveness and strength of a company to resist external challenges;■It increases the market value of the company and thus benefit the shareholders;■It allows the company to become more profitable and become a positive force in the society.However, merger and acquisition is not a simple task. The probable successful rate of a merger and acquisition event does not reach 50%. We find that only a minority of the mergers and acquisitions results in better performance for corporations or multi-national companies. There are two reasons:(1) The merger and acquisition was a failure in itself. Due to differences in corporate culture and clashes in management styles caused higher costs that over shadowed the advantages of such event;(2) The merger and acquisition was somewhat of a success, however, the resulting company cannot meet the demands of the market changes.Therefore, to assure that a merger and acquisition is successful, the planning prior to the event and strategies used to merge the companies to ensure a smooth transition are critical to assure that the two corporate culture assimilates seamlessly, minimizing management style differences, and control the event's costs.This thesis uses company K's merger and acquisition event to illustrate the following:(1) To succeed in a merger and acquisition, management and execution committee have to have a clear goal with a detail plan that includes executable procedures. In addition, the appropriate execution personnel has to be identified.(2) The planning prior to the merger and acquisition must be detailed. Execution of the merger and acquisition should begin during the negotiation phase. Furthermore, speed of execution of the merger.(3) Planning prior to a merger and acquisition and the company's assimilation process is not straightforward and is complicated. However, a certain pattern and method still exist and can be followed. Therefore, professionals with such knowledge should be the ones that lead and execute the merger and acquisition for it to be successful.(4) Human capital is the most valuable of resources. The new leadership needs to provide all employees with incentives and security through assuring the employees' of their career opportunities and being clear on the mission of the new company to involve the employees as part of the merger and acquisition and contribute to its success. As globalization continues to develop and mergers and acquisitions become popular,, it is critical to understand and learn the skills and methods required for a successful merger to prevent a failure. This thesis investigates and analyzes Company K's planning and strategies implemented prior and after its merger and acquisition as an example to discuss issues surrounding mergers and acquisitions.