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M&A Integration: Case: Balancing The Power Equation: Suzlon Energy Limited
M&A Integration: Case: Balancing The Power Equation: Suzlon Energy Limited
Demonstrating a
Focusing on
committed and Building teams and
financial and Remaining flexible
open-minded work units
strategic objectives
leadership
Combining
Effecting and corporate functions
Setting priorities Measuring results
cooperation and internal
processes and
Integration Approaches
Development of a new
Communication of the new management structure for
Implementation of a new Bringing together formerly
strategic objectives and the the new, larger organization
shared corporate culture and separate units from both
new vision of the merged especially overcoming of
management culture former organizations
organization leadership problems in very
large units
Capturing value
Welcoming
Teambuilding from different
new culture
sources
Sources of Value
New products, service offerings, markets, Financial value such as balance sheet items,
Integrated supply chain
customer segments, and distribution channels taxes, etc.
Leverage procurement volume (product and Optimized programs and policies e.g. benefits
Enhanced market presence and market capture
non-product) programs
Headquarters consolidation
capabilities intact.
High • Manage operations at arms length (except where
Preservation Symbiosis interdependencies such as financial risk sharing and
general management capability transfer are needed)
• Continued boundary protection
• Holding
• No intention of integrating and creating value through
Low Holding Absorption anything other than financial transfers or risk sharing
• Holding company (unrelated-diversified) strategy
Symbiosis • Absorption
Most complex • Integration implies a full consolidation of all
Issue is to transfer capabilities but maintain necessary autonomy operations, organization and culture of the two
Start process like a preservation firms
Premium versus patience (costs are considerable but it takes time to•
Key issue is timing as opposed to how much
develop)
integration should take place
Clear understanding regarding strategic objectives, time horizons, and
procedures
• Won’t see benefits until this is accomplished.
Shield acquired firm from uncontrolled interactions
Set up gatekeeper function to control interactions between acquired
and parent units that will be collaborating
Strategies for Post Merger Integration
Detailed market
Effective schedule
research
Characteristics of Most Successful M&As
Cross-functional
Permanent integration team
M&A Manual
integration staff with members
from both firms
Communication
Pre-merger Checklists of
strategies that
cultural potential problem
match the M&A
assessments areas
motive
Dead
Emergency
Urgent
Non-Urgent
Merger Motivation Theories
Process and
Empire
Valuation disturbance
building
theory
IE Matrix
• The IE matrix is a strategic • By multiplying the weight and rating, a
management tool that allows a firm to weighted score is then calculated for
formulate strategy based on the internal factors and external factors
evaluation of external and internal • Finally, based on where the two scores
factors meet, the strategy is appropriately
• The IE matrix combines scores from the formulated
external factor evaluation (EFE) and • The IE matrix is used to evaluate the
internal factor evaluation (IFE) company’s current strategy in response
matrices, with the IFE score plotted on to external and internal factors and
the X-axis and the EFE score on the Y- also to formulate a new company
axis strategy based on internal and external
• The firms’ strengths and weaknesses factors, assessing broad direction for
are then identified and used for the IFE further strategy formulation or
score, while opportunities and threats planning
are used for the EFE score
• Each factor is weighted and, based on
the firm’s performance and its present
condition, a rating is given
IF-EF Matrix
IF-EF Score
Parameters for Evaluation of a M&A
Capabilities Transfer Model For Breakthrough Phase
After- The – Deal Custodial Capabilities
Model For Continuing Integration Implementation Appraisal And Recalibration
Stages Of An Integration Implementation
Ratings Of The Leadership Regarding Addressing M&A Cultural Integration
The Discover- Invent- Deliver Approach To Cultural Integration
Before The Social Interaction Taking Place.
Social Interaction Involves Providing Knowledge To Another. Person Ab
Provides Fact K3 To Person Aa.
After The Social Interaction Taking Place.
Pre- Merger Agent- Task- Knowledge Meta – Network Representation For A Single
Actor In An Organization. Legend: Squares Are Tasks, Circles Are Knowledge
Pre- Merger Agent- Task- Knowledge Meta – Network Representation For A Two
Actors In A Organization. Legend: Squares Are Tasks, Circles Are Knowledge
Computationally Modeling The Effect Of Organizational Complexity
Dependent Variables For Organization Performance Experiment
Average Relative Performance According To Total Number Of Actors in Post-
Merger Organization (NewCo)
Average Relative Performance According To Total Number Of Workgroups in
The Organization (Same Parameter Settings In Alpha, Beta And Thus NewCo)
Average Relative Performance According To Relative Number Of Actors In A
Workgroup (Beta- To- Alpha)
Standard Deviation Of Relative Performance According To Relative Number
Of Actors In A Workgroup ( Beta- To- Alpha)
Descriptive Statistics
Correlation matrix for target variables
Correlation Matrix
Average monthly abnormal returns to the acquirers with announcement year of 1988
Average monthly abnormal returns to the acquirers with announcement year of 1989
Average monthly abnormal returns to the acquirers with announcement year of 1990
Average monthly abnormal returns to the acquirers with announcement year of
1991
Average monthly abnormal returns to the pooled acquirers with announcement
years in 1988-1991
Test Of Median Equality For The 60-month Average Buy-and-hold Abnormal Returns
Descriptive Statistics For The Average Monthly Buy And Hold Abnormal
Returns (BHAR)
Ratings Of Leadership Regarding Retaining And Rerecruiting Acquired
Companies’ Key Management And Employees
The Rerecruitment Needs Pyramid
Rerecruitment Matrix
Retention And Rerecruitment Options
Retention And Rerecruitment Options, Cont’d
Understanding M&As Emotions
Managerial Influences On Employees’ Emotions
The Influence Of Social Identity On M&A Outcomes
Development Of A Conceptual Framework
Conceptual Framework
‘Temperature Curve’: A Respondent’s Longitudinal Perspective
Combined ‘temperature curves’
Top Managers’ Perception Of Employees’ ‘Temperature Curves’
Middle Managers ‘Temperature Curves’
Employees ‘Temperature Curves’
Combined ‘Temperature Curves’ From Respondents Of Company X
Combined ‘Temperature Curves’ From Respondents Of Company Y
Emotions And Cognition-related Affect Terms Reported In The Empirical Study
Emotions And Cognition-related Affect Terms Reported In The Empirical Study
The Governance Structure For Transition
The Accountability Structure In Each Period
Integration Roles For The HR Function
The “ Making Strategy Work” Model
Shifting Trends In Japanese Compensation Through The 1990s
Template for the ‘Temperature Curve’
M&A volume, U.S. and U.S. Cross – Border Transactions, 2000-2006
Deals Then And Now
The Deal Flow Model
Deal Flow Model
Strategic Integration Planning Analysis
Expanded Components of Due Diligence
Due Diligence as a Iterative Process
Process Model For Cultural Due- Diligence Analysis
Stage At Which HR Becomes Involved In The Deal Process
Coordinating HR Into the Due-Diligence Process
Best – Practices Baseline Model
Sample Issues Related To Human Capital
What Integration Managers Do
Viewing Merger Integration As A Process
Staffing Strategy Sequencing
Integration Planning: A Developing And Interactive Process Across
All Preacquisition Phases And Core Capabilities
A Business Operating Model Allowing For The Gradual Introduction Of
Newly Acquired Business Units
Where Organizational Activities Take Place In The Front, Middle, And Back Courts
Typical Staff Selection Process
Staff Selection Process After Acquiring Another Company:
Managers Should Consult Their Peers
Integration Phase: Activity Overview
IT Integration Detail Plan: Example
Systems Integration Project Charter: Example
Integration Project Management Framework: Example
M&A Integration Steering Group Organization
Four Areas Of Measurement
Development Process For Measuring The Newco Organization’s Basic Operations
Merger Integration Scorecard
Merger Integration Scorecard
Monthly Scorecard For Synergy Performance
Cumulative Synergy Chart
Application Of Leadership To The M&A Process
Six-dimension Integrative Model Of Leadership
Joining Different Assets Of Two Companies
The Knowledge of Capital Model
Market Demands
Descriptive Information Regarding Case Studies
Data Description
Conceptual Framework
Case Comparison
THE WHEEL OF FORTUNE
Time For An Upgrade
Integration Approaches
Critical Process Dimensions Of Each Integration Approach
Profile Of Integration Approaches Used For Content Analysis
ANOVA Results Of Difference In Process Dimensions Across Integration Approaches
Composition Of Sample And Distribution Across Decades
Research Focus in M&A Research
Perspective In Performance Measures
Temporal Horizons In Performance Measures
Operational Definitions Of Performance
Operational Definitions Of Innovative Performance, Indicators And Time
Lags
Extended Troubled M&A Integrations
Extended Troubled M&A Integrations, cont’d
Percentage Of Companies In Need Of Merger Repair
Merger Integration Result Assessment
Merger Integration Process Assessment
Merger Integration Process Assessment, cont’d
The Four Stages Of Acquisition Capabilities
Common Planning Model For The Integration’s Infrastructure
Task Force Planning Process
Process For Weekly Updates
Calibrate Priority Projects To Integration Milestones
High Level Summary Timeline- Example 1
High Level Summary Timeline- Example 2
Sample Consolidation Project Plan
List Of Oversight Vehicles
Continual Need For Post-deal Review
Post - Merger Changes
Post- Integration Review Phase: Activity Overview
Learning From Experience
PURCHASING
P/L Statement And Balance Sheet For PSM
Number Of Mergers Or Acquisitions Conducted Since 2000
Recent Mergers Or Acquisitions Are Done Mainly Within Industries
Rating Of Companies’ Overall Integration Efforts
“Communication” And “Leadership And Decision Making” Are The Integration Areas
Most Needing Improvement
Typical Time Spent For Full Integration Of Acquired Companies’ People,
Processes, And Systems
Percentage Of Companies In Need Of Merger Repair
ACCOUNTING DEPARTMENT INFORMATION SYSTEM REQUIREMENT
TRANSITION COST ESTIMATE
TRANSITION COST ESTIMATE
TRANSITION TIMELINE
TRANSITION TIMELINE
Growth Rates In U.S. Workforce
Age- Related Demographic Changes In The U.S. Workforce
Effective Communications Matrix: Finance Function
Staffing Calender Matrix
Streamlined Staffing Process Model
Comprehensive Staffing Process Model
Estimated Major Bank IT Spend-levels ($ Billions)
Alignment Of Business Strategy, IT Strategy, And Merger Strategy
Information Technology Integration Schematic
Mapping IT Integration Requirements, Products, And Markets
Comparing IT Integration In Merger Situation
Schematic Of Principal Drivers Of IT Integration
Potential Resource Requirements in IT Integration
Mechanisms for implementing buybacks
Structure – Culture – Incentives – People
Model
Post Acquisition Results
Communication
Pre-merger Checklists of
strategies that
cultural potential problem
match the M&A
assessments areas
motive