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Managing People in Mergers and Acquisitions Part 1: Reasons and Reality

March 25, 2016 • Business Process, Corporate Governance, Global Business, OPERATION, STRATEGY & MANAGEMENT, Talent Management, Team Managment

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By Guido Stein and Marta Cuadrado
In Part One of this article we will address a number of issues related to mergers. First, we will look at the key reasons why companies decide to pursue them and the reasons why many fail. Second, we will consider the inevitable realities associated with mergers. Part Two is available in the next issue.

 “Take the right steps; take them quickly enough; prepare people to live with the problems that will remain” – P. Pritchett  

 

The following statement is attributed to Warren Buffet:

“Our method is very simple. We just try to buy businesses with good-to-superb underlying economics run by honest and able people and buy them at sensible prices. That’s all I’m trying to do”.

The aim of this article is precisely to consider the human dimension of mergers and acquisitions and the way these processes impact people. In the substantial body of scientific literature that exists on this topic, authors discuss the rules and “magic” formulas that lead to a successful acquisition, grounding their arguments in empirical evidence.1 One of the first conclusions that can be drawn from examining this literature is that the authors cite a wide variety of empirical evidence in each case, and that this evidence serves to support different, and even contradictory, theses concerning the key aspects and elements of company acquisitions. Rationalisations are made a posteriori and seek to offer rules, or something close to that. They should be taken as broad approximations, but do point in the right direction. As a result, they are perhaps more useful for those whose work involves taking action than they are for academics concerned with scientific rigor.

In Part One of this technical note we will address a number of issues related to mergers. First, we will look at the key reasons why companies decide to pursue them and the reasons why many fail (Sections 1 and 2). Second, we will consider the inevitable realities associated with mergers (Section 3). Part Two is available in the next issue.



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