Post-merger integration

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Post-merger integration or PMI is a complex process of combining and rearranging businesses to materialize potential efficiencies and synergies that usually motivate mergers and acquisitions. The PMI is a critical aspect of mergers; it involves combining the original socio-technical systems of the merging organizations into one newly combined system.

Corporate synergy refers to a financial benefit that a corporation expects to realize when it merges with or acquires another corporation. Corporate synergy occurs when corporations interact congruently.

Mergers and acquisitions transactions in which the ownership of companies, other business organizations or their operating units are transferred or combined

Mergers and acquisitions (M&A) are transactions in which the ownership of companies, other business organizations, or their operating units are transferred or consolidated with other entities. As an aspect of strategic management, M&A can allow enterprises to grow or downsize, and change the nature of their business or competitive position.

Contents

Overview

The process of combining two or more organizations into a single organization involves several organizational systems, such as assets, people, resources, tasks, and the supporting information technology. [1] The process of combining these systems is known as 'integration'. Integration Planning is one of the most challenging areas to address pre-close during a merger or acquisition. [2] [3] Even though culture clash between companies can cause integration problems, only 4% of the executives in a survey by Pritchett, LP reported that their organizations include culture-specific questions in their due diligence checklists. [4] Culture specific due diligence may include cultural screening and creating a cultural profile of the target firm. GE Capital conducts a cultural assesment of prospective candidates against metrics such as trust in existing managers, language barriers, and operating processes to then facilitate a culture work out session between both sides. Lee Marks, Mitchell; H. Mirvis, Philip (December 2011). "A framework for the human resource role in managing culture in Mergers and Acquisitions". Human Resource Management. 50: 859–877.

The integration management office, or IMO, manages core functions of the integration effort and provides structure for integration delivery. [5] In a survey by Global PMI Partners of 143 M&A executives, 67% of respondents incorporate IMOs during an acquisition on at least half of their initiatives in a cross-border setting. [6]

Integration often requires a daunting degree of effort and coordination, but when done well, companies may deliver as much as 6 to 12 percentage points higher total returns to shareholders (TRS) than those that don’t. [7]

Organizational lifecycle

Integration fits within an organizational lifecycle or specific business mergers and acquisitions cycle where businesses buy, integrate, then dispose of businesses:

Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy. It may also extend to control mechanisms for guiding the implementation of the strategy. Strategic planning became prominent in corporations during the 1960s and remains an important aspect of strategic management. It is executed by strategic planners or strategists, who involve many parties and research sources in their analysis of the organization and its relationship to the environment in which it competes.

Due diligence legal term

Due diligence is the investigation or exercise of care that a reasonable business or person is expected to take before entering into an agreement or contract with another party, or an act with a certain standard of care.

See also

Business acquisition is the process of acquiring a company to build on strengths or weaknesses of the acquiring company. A merger is similar to an acquisition but refers more strictly to combining all of the interests of both companies into a stronger single company. The end result is to grow the business in a quicker and more profitable manner than normal organic growth would allow.

Program management or programme management is the process of managing several related projects, often with the intention of improving an organization's performance. In practice and in its aims, program management is often closely related to systems engineering, industrial engineering, change management, and business transformation. In the defense sector, it is the dominant approach to managing very large projects. Because major defense programs entail working with contractors, it is often called acquisition management, indicating that the government buyer acquires goods and services by means of contractors. The Defense Acquisition University (DAU) in Ft. Belvoir, Virginia is the word's leading educator in managing major programs.

Project management is the practice of initiating, planning, executing, controlling, and closing the work of a team to achieve specific goals and meet specific success criteria at the specified time.

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Board of directors board composed of directors

A board of directors is a group of people who jointly supervise the activities of an organization, which can be either a for-profit business, nonprofit organization, or a government agency. Such a board's powers, duties, and responsibilities are determined by government regulations and the organization's own constitution and bylaws. These authorities may specify the number of members of the board, how they are to be chosen, and how often they are to meet.

Organizational culture encompasses values and behaviors that contribute to the unique social and psychological environment of a business. The organizational culture influences the way people interact, the context within which knowledge is created, the resistance they will have towards certain changes, and ultimately the way they share knowledge. Organizational culture represents the collective values, beliefs and principles of organizational members and is a product of factors such as history, product, market, technology, strategy, type of employees, management style, and national culture; culture includes the organization's vision, values, norms, systems, symbols, language, assumptions, environment, location, beliefs and habits.

Corporate development refers to the planning and execution of strategies to meet organizational objectives. The kinds of activities falling under corporate development may include management team recruitment, phasing in or out of markets or products, arranging strategic alliances, identifying and acquiring companies (M&A), securing corporate financing, divesting of assets or divisions, and management of intellectual property. The activities encompassed are often the role of the CEO.

Senior management, executive management, upper management, or a management team is generally a team of individuals at the highest level of management of an organization who have the day-to-day tasks of managing that organization — sometimes a company or a corporation.

WesternGeco geophysical services company with headquarters in London

WesternGeco is a geophysical services company. It is headquartered in the Schlumberger House on the property of London Gatwick Airport in Crawley, West Sussex, in Greater London.

An enterprise information system (EIS) is any kind of information system which improves the functions of enterprise business processes by integration. This means typically offering high quality of service, dealing with large volumes of data and capable of supporting some large and possibly complex organization or enterprise. An EIS must be able to be used by all parts and all levels of an enterprise.

The chief risk officer (CRO) or chief risk management officer (CRMO) of a firm or corporation is the executive accountable for enabling the efficient and effective governance of significant risks, and related opportunities, to a business and its various segments. Risks are commonly categorized as strategic, reputational, operational, financial, or compliance-related. CROs are accountable to the Executive Committee and The Board for enabling the business to balance risk and reward. In more complex organizations, they are generally responsible for coordinating the organization's Enterprise Risk Management (ERM) approach. The CRO is responsible for assessing and mitigating significant competitive, regulatory, and technological threats to a firm's capital and earnings. The CRO roles and responsibilities vary depending on the size of the organization and industry. The CRO works to ensure that the firm is compliant with government regulations, such as Sarbanes-Oxley, and reviews factors that could negatively affect investments. Typically, the CRO is responsible for the firm's risk management operations, including managing, identifying, evaluating, reporting and overseeing the firm's risks externally and internally to the organization and works diligently with senior management such as Chief Executive officer and Chief Financial Officer.

Directors and officers liability Insurance is liability insurance payable to the directors and officers of a company, or to the organization(s) itself, as indemnification (reimbursement) for losses or advancement of defense costs in the event an insured suffers such a loss as a result of a legal action brought for alleged wrongful acts in their capacity as directors and officers. Such coverage can extend to defense costs arising out of criminal and regulatory investigations/trials as well; in fact, often civil and criminal actions are brought against directors/officers simultaneously. Intentional illegal acts, however, are typically not covered under D&O policies.

Purchasing Managers Index

Purchasing Managers' Indexes (PMI) are economic indicators derived from monthly surveys of private sector companies.

The following outline is provided as an overview of and topical guide to management:

The human resource consulting industry has emerged from management consulting and addresses human resource management tasks and decisions. HR Consultants can fill two typical roles (1) Expert Resource Consultant (2) Process/People consultant. These two roles are defined by Steele F. (1975), Kubr,M. ; Niedereicholz (1996), Curnow-Reuvid (2003) and Kipping, K. and Clarck (2014).

Price Pritchett is a business advisor, speaker, and author specializing in mergers, culture, and organizational change.

Management due diligence is the process of appraising a company's senior management—evaluating each individual's effectiveness in contributing to the organization's strategic objectives.

An international joint venture (IJV) occurs when two businesses based in two or more countries form a partnership. A company that wants to explore international trade without taking on the full responsibilities of cross-border business transactions has the option of forming a joint venture with a foreign partner. International investors entering into a joint venture minimize the risk that comes with an outright acquisition of a business. In international business development, performing due diligence on the foreign country and the partner limits the risks involved in such a business transaction.

IntraLinks

Intralinks Holdings, Inc., founded in 1996, is a global technology provider of inter-enterprise content management and collaboration solutions. Its products serve the enterprise collaboration and strategic transaction markets, enabling the exchange, control, and management of information between organizations.

Transformational acquisition is an acquisition of a company or a division of it with the aim to jointly establish a new business model or to enrich the offer for its customers by different expertise and new solutions. This may be different production technologies or new capacity.

The Institute for Mergers, Acquisitions and Alliances (IMAA) is an international professional association that is active in several countries. It was established in 2004 as a part of a fully accredited private university Webster University Vienna in Austria. IMAA is the most global professional body in the world in terms of membership diversity, international presence and activities. It aims to promote the creation, exchange and transfer of knowledge around mergers and acquisitions and strategic alliance. In 2007, the Institute was spun-off to continue its expansion as an Association headquartered in Zurich, Switzerland, but with branches in Vienna and Ho Chi Minh City. It remains affiliated with various universities and faculty members and acts as a non-profit think tank on M&A

References

  1. Anthony F., Buono; Bowditch, James L. (1989). The human side of mergers and acquisitions: Managing collisions between people, cultures, and organizations. San Francisco: Jossey-Bass Publishers. ISBN   1-55542-135-0.
  2. "Merger Integration Due Diligence". Dr. K.M.Popp. Retrieved 2014-07-21.
  3. M&A Transaction Survey of 50 executive M&A respondents (2013); ModalMinds Inc.; http://modalminds.com/modality/ma-transaction-survey-results/
  4. Pritchett LP (2018), Corporate Culture: The "X Factor" in Merger Success and Failure; https://www.mergerintegration.com/corporate-culture-x-factor-merger-success-and-failure
  5. Hofmeyer, Stefan; Whitaker, Scott C.; et al. (2016). Cross-Border Mergers and Acquisitions. Hoboken, New Jersey: John Wiley & Sons, Inc. ISBN   978-1-119-04223-5.
  6. Global PMI Partners, Cross-Border M&A Integration Survey, November 2015; http://www.gpmip.com
  7. Doherty, Rebecca; Engert, Oliver; West, Andy. "A Billion Dollar Successful Separation". Transaction Advisors. ISSN   2329-9134.