Human Side of Mergers and Acquisition

By Thomas L. Legare

Amit Mehta P08002 | Apoorva kothari P08009 |

Shweta Gupta P08050 | Sonal Gupta P08052
 So Far…

• Most mergers and acquisitions premised on the belief that the combined company will
have greater value.
• How much a company is worth, what terms to negotiate, how to structure the transaction,
and how to get regulators to go along with it.
• However, the ultimate success of the deal depend on how well the acquirers manage the
difficult organizational and human resource integration issues at their newly purchased
company.
• More often, interpersonal conflict arises because corporate staff and division managers
have differing perspectives on what their company wants from a merger.
 Hewlett-Packard Acquires Apollo Computer
On April 12. 1989. the Hewlett-Packard Company acquired Apollo Computer for $476
million.
“Financial Fit“
Merger of #3 HP and #4 Apollo catapulted HP past Digital and ahead of Sun in the $4.1
billion workstation market.
- HP looks into joint
HP developed line of ventures and possible
Review of (R&D)
work stations, acquisitions
capability and more Apollo becomes
but trailed pioneers Apollo - Apollo racked with
investments in a wholly owned
and Sun Microsystems in subsidiary of HP.
networking and profit problems and
technology leadership and
graphics
market penetration. risk of losing
customer confidence.

1980 Early 1988 late 1988 1989

•Add to HP's market position
HP’s Take on • Offer a short-term competitive advantage in graphics and group
the Acqn. computing
•Shore up Apollo's financial stability and reputation.
•Financial synergies: reduced overhead costs and some tax benefits.
 The turn of events…

“ Organizational Misfit“
• 2 years after the merger, HP found the workstation business crumbling
• HP bogged down by product delays and problems of merging two organizations 3,000
miles away
• Contrasting corporate cultures.
• Apollo yielded its leading position to Sun Microsystems.

Dilemmas and Conflicts How to compete in the marketplace

HP  solid engineering, marketing, and
service.
 Selling points – quality and reliability backed HP’s
reputation.
Apollo  Competed through state-of-the-art technology
delivered first-to-market
 The turn of events

“ Organizational Misfit“
• 2 years after the merger, HP found the workstation business crumbling
• HP bogged down by product delays and problems of merging two organizations 3,000
miles away
• Contrasting corporate cultures.
• Apollo yielded its leading position to Sun Microsystems.

Dilemmas and Conflicts How to compete in the marketplace

HP  solid engineering, marketing, and
service.
Operation of the business Selling points – quality and reliability backed HP’s
HP  Management-by-objectives plans.
Apollo  a "systems integrator" that reputation.
Apollo
brought products to market through  Competed
close- throughof
More state-of-the-art
a "components“ technology
company
knit work teams delivered first-to-market
with various "entities" assigned parts of a
 entrepreneurial and the project
atmosphere was rough and- tumble.  driven by processes and
 loyalty to team and ‘winning’ procedures
was sacrosanct.
 The turn of events…

“ Organizational Misfit“
• 2 years after the merger, HP found the workstation business crumbling
• HP bogged down by product delays and problems of merging two organizations 3,000
miles away
• Contrasting corporate cultures.
• Apollo yielded its leading position to Sun Microsystems.

Dilemmas and Conflicts How to compete in the marketplace

HP  solid engineering, marketing, and
service.
 Selling points – quality and reliability backed HP’s
Operation of the business HP  Management-by-objectives plans.
reputation.
Apollo  a "systems integrator" that brought
Apollo  Competed throughof
Culture
More state-of-the-art
Misalignment
a "components“ technology
company
products to market through close-knit work delivered first-to-market
HP  Seenwith
as highly
variousprofessional and rather
"entities" assigned parts of a
teams
homogenousproject
 entrepreneurial and the atmosphere
was rough and- tumble. Apollo  More  generalists
driven byand more conversant
processes and with
broader
 loyalty to team and ‘winning’ was range of technical and business issues.
procedures
sacrosanct.
Interpersonal conflicts existed within Apollo's conversion team as well as
with HP's conversion team members.
Key Areas of
Conflicts
 Interpersonal conflicts existed within Apollo's conversion team as well as
with HP's conversion team members.
Key Areas of
Conflicts
Environment
• During systems conversion project, no. of Apollo HR and IS employees held positions
longer needed in an HP product div.
• Employees asked to stay in a transitional status for 6 months and then leave with severance
packages
• Uncertainty and stress affected perceptions and judgments and dynamics of the HP-Apollo
systems conversion team.
Interpersonal conflicts existed within Apollo's conversion team as well as
with HP's conversion team members.
Key Areas of
Conflicts

Strategic Planning
• HP  $9 billion multidivisional business with 90,000 employees.
Apollo  Standalone business organized by function, and these functions closely tied
• Strategic function-to-function mapping to determine process and organizational changes
to integrate systems was never undertaken.
• Bureaucracy" and the "adhocracy" of Apollo led to number of misunderstandings.
 Interpersonal conflicts existed within Apollo's conversion team as well as
with HP's conversion team members.
Key Areas of
Conflicts

Project Control
• HP's human resource and payroll functional experts typically employed their own distinct
framework thus, a ‘fragmented’ picture
• Apollo did not understand HP's systems well enough to get a clear view of how changes in
processes and systems would impact their organization
• HP's conversion team pressured Apollo's conversion team to meet project milestone
deadline dates.
A social science framework, suggested by Morley Segal (1990, 1996). was used as a
guide for understanding why Apollo and HP human resources development
professionals were successful in understanding and resolving interpersonal
conflicts.
 The Human Resource Model

●
Think like Freud

Identifying the Problem

1. Think like Freud

Unconscious

Transference

Defense Mechanisms
 1.1 Unconscious
• Part of the mind exists below/beyond conscious understanding

& control

•The expression of the conscious is continually present

•It influences our behavior, feelings & attitudes in powerful ways

•Can surmount the obstacles installed in organizations to limit the

unpredictability of human behavior

•Both positive & negative manifestations possible

 1.2 Transference
• Growing up creates confusing & frustrating experiences
• Individuals go through life unconsciously attempting to relive
aspects of early care giving relationships
• IRONY : processes & rules have an opposite effect in case of
changes due to a merger
• Reinforcement of conditions that invite feelings of old, unfulfilled
relationships with past authority figures
•Acquired organizations encourage transference
• HRD professionals must understand & cope with transference in
themselves & with whom they work
 1.3 Defense Mechanisms
●
●
● Mind’s
Moral
Rational
Id
Ego
Superego
instinctive
Planner
Voice
state

• The Ego cannot always discharge energy from the Superego & Id

• Defense by distorting, denying or deflecting reality

• Barrier to accurate information – Ego is less able to do its job of coping
with reality
 2. Embody Rogers
• Main obstacle to communication – Tendency to evaluate
• Active listening can mitigate evaluative impulses & improve
communication
• Implies being internally consistent - thoughts, feelings, behavior
are all of one expression
• Unconditional positive regard – provides atmosphere to derive
the best from individual
•Empathetic listening – step in the other person’s shoes and
restate content & feelings behind it
 3. Use Lewin

• Individuals, groups & organizations operate within a

psychological field akin to an opaque glass bubble (perceived

world)

• Self perception

• Perception of the other group

•Perception of how other groups perceive them

 Conclusion
HRD professionals should:

1. Think like Freud

2. Embody Rogers
3. Use Lewin
when understanding & resolving interpersonal conflicts that
are likely to crop up when organizational & cultural ‘misfits’
exist after an M&A
Thank You