Approaches to company mergers
Posted: Wed Jan 22, 2025 5:18 am
Problem #3: The enterprise reorganization process is complete, bonuses have been accrued, but the system does not work. Most often, this situation occurs when changes are made to the organizational structure of companies in the form of a merger/acquisition. In some cases, the reason is significant differences in the corporate culture and business models of the participating companies.
There are two main approaches to merging companies. In the first case, a huge number of procedures and production processes operating at the parent company are introduced into the acquired company in a relatively short period of time. At the same time, management with unusual corporate traditions and approaches to work comes to the acquired company. The result is a sharp resistance to innovations from the personnel of the acquired company, which leads to mass layoffs. There is a virtual halt in activity, and current work is carried out by inertia. Where production processes should be, there is a void (those being introduced do not yet work, the old ones are already broken).
Approaches to company mergers
The main advantage of this approach stockholder database to merger is the ability to quickly establish control over the acquired company, to which financial indicators and operational efficiency are sacrificed. This option can be justified for solving the problem of quickly "dissolving" a new direction in the general vertical management system, if even minimal independence of this division is not provided.
This method is often used when acquiring competing organizations and small firms if their operating model and corporate culture are not particularly important, and only market share and certain assets or customer base are important (unless this will lead to the need to invest in the loyalty of certain account managers).
When choosing such a radical takeover model, in order to reduce the shock effect of the transition moment, it is necessary to act quickly, maintaining a tough position. Let's consider the main steps that will be required with this approach:
Replacement or removal of CEOs, CFOs, and other key professionals who control and/or manage cash flows. The process can be abrupt or gradual (depending on the form and objectives of the reorganization).
Organizing work with the most important customer relationship managers, creating special motivation methods. If an agreement cannot be reached, such specialists need to be replaced.
Developing a system to stimulate the transition of functional representatives of the management of the joining enterprise who are well acquainted with the implemented production processes and corporate culture. Such specialists should create a foundation for the planned changes, facilitate the adaptation of personnel, smooth out the problems of the transition stage and prevent the shutdown of the new division.
There are two main approaches to merging companies. In the first case, a huge number of procedures and production processes operating at the parent company are introduced into the acquired company in a relatively short period of time. At the same time, management with unusual corporate traditions and approaches to work comes to the acquired company. The result is a sharp resistance to innovations from the personnel of the acquired company, which leads to mass layoffs. There is a virtual halt in activity, and current work is carried out by inertia. Where production processes should be, there is a void (those being introduced do not yet work, the old ones are already broken).
Approaches to company mergers
The main advantage of this approach stockholder database to merger is the ability to quickly establish control over the acquired company, to which financial indicators and operational efficiency are sacrificed. This option can be justified for solving the problem of quickly "dissolving" a new direction in the general vertical management system, if even minimal independence of this division is not provided.
This method is often used when acquiring competing organizations and small firms if their operating model and corporate culture are not particularly important, and only market share and certain assets or customer base are important (unless this will lead to the need to invest in the loyalty of certain account managers).
When choosing such a radical takeover model, in order to reduce the shock effect of the transition moment, it is necessary to act quickly, maintaining a tough position. Let's consider the main steps that will be required with this approach:
Replacement or removal of CEOs, CFOs, and other key professionals who control and/or manage cash flows. The process can be abrupt or gradual (depending on the form and objectives of the reorganization).
Organizing work with the most important customer relationship managers, creating special motivation methods. If an agreement cannot be reached, such specialists need to be replaced.
Developing a system to stimulate the transition of functional representatives of the management of the joining enterprise who are well acquainted with the implemented production processes and corporate culture. Such specialists should create a foundation for the planned changes, facilitate the adaptation of personnel, smooth out the problems of the transition stage and prevent the shutdown of the new division.