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Comprehensive Guide to Mergers & Acquisitions, A: Managing the Critical Success Factors Across Every Stage of the M&A Process

By Yaakov Weber, Shlomo Tarba, Christina Oberg

Published by FT Press

Published Date: Dec 19, 2013

Description

Leverage today's most complete and practical framework for driving superior business value from mergers and acquisitions -- both domestic and international. A Comprehensive Guide to Mergers and Acquisitions Management focuses on critical success factors across every stage of the process, including planning, screening, negotiation, due diligence, transition management structures, post-merger integration, leadership and trust, cultural integration, HR practices, control, monitoring, and more. Authored by Yaakov Weber, an international expert in M&A management, strategic alliances, and strategic management, this book's uniquely interdisciplinary approach fully addresses both operational and cultural requirements, supporting participants in every role. Replete with recent examples and cases, it pays special attention to crucial strategic and behavioral linkages between pre- and post-merger stages, explaining why they are so important and how they can be managed to create maximum value. Throughout, Weber provides practical tools, tables, and figures that can help M&A implementers ensure best performance and achieve success where others have failed. As just one example, he provides proven instruments for analyzing cultural differences and the potential for synergy, and translating that potential into reality. For multiple audiences, including board members and top executives who must evaluate the strategic and financial issues associated with M&A; investment bankers, VCs, and other investors who must screen and select acquisitions; managers who must execute business combinations; consultants in strategy, HR, culture, and other areas; and faculty and students in executive education, MBA, and BA-level business programs.

Table of Contents

Preface    xvi

Part I  Value Creation Model for Mergers and Acquisitions    1

Chapter  1  The M&A Paradox: Factors of Success and Failure in Mergers and Acquisitions    3

Finance and the Capital Market    5

Strategic Management    7

Organizational Behavior    9

References    11

Chapter  2  An Integrated Model for Value Creation in Mergers and Acquisitions    13

Overview    13

Different Disciplines, Different Stages, No Interrelationships    14

An Integrated Model for Value Creation in M&A    17

Stage I: Planning and Strategic Management    18

1 Strategic Management, Goals, and M&A Strategy    18

2 Searching, Screening, and Selection    19

3 Financial and Strategic Estimate, Including Synergy Analysis and Corporate Culture Differences    19

4 Integration Planning    20

Stage II: Negotiation, Due Diligence, and Agreement    20

1 The Negotiation Processes    20

2 Assessment of Due Diligence    21

Stage III: Integrating the Organizations    22

1 Approaches to Integration, Cultural Differences, and Human Capital Integration    22

2 Leadership and Integration Infrastructure    23

3 Stress and Tension    23

4 Communication Strategy    24

5 Cultural Assessment and Cultural Integration    24

6 Integration Approaches    25

7 Evaluation, Control, and Feedback    26

Conclusion    26

References    27

Chapter  3  Strategic Motives and Considerations    29

Introduction    29

Strategic Motives for an M&A    29

Synergy    30

Market Power    31

Diversification    31

Financial and Tax Issues    32

Valuation Ratio    32

Agency Theory    32

The Strategic Management of M&As as Part of Corporate and

Competitive Strategies    33

References    36

Chapter  4  M&A Strategic Decisions .37

Decision    1: Should the M&A be Part of the Current Strategy?    37

Decision    2: Choice of the Appropriate Partner for the M&A:

Strategic Fit and Post-Merger Integration (PMI)    40

Diversification: Two Main Types of M&As    41

Entering into a New Industry    41

Unrelated Diversification: New Business    42

Related Diversification    43

Joint Ventures    47

Strategic Outsourcing    48

Reference    49

Part II  Analysis Tools for Key Success Factors    51

Chapter  5  Synergy Potential and Realization    53

Introduction    53

Sources of Synergies    53

Sharing Resources    54

Knowledge, Skills, and Capabilities Transfer    54

Types of Knowledge    55

Knowledge Transfer Process    56

Issues of Knowledge Transfer    57

Enable Knowledge Transfer    58

Knowledge Transfer in Technology and Innovation-Intensive Acquisitions    59

Knowledge Transfer of General Management Skills and Capabilities    60

Other Benefits of the M&A    60

Analysis of Synergy Potential    61

Horizontal Mergers    61

Vertical Integration    62

Saving on Expenses    63

Assurance of Supply or Demand    64

Improvement of Competitive Advantage    64

Disadvantages of Vertical Integration    65

References    68

Chapter  6  Culture and Cultural Differences Analysis    69

Introduction    69

The Importance and Advantages of Evaluation and Measurement of Differences of Management Culture    70

What Is Organizational Culture?    71

Dimensions of Organizational Culture    72

1 Approach to Innovation and Activity    73

2 Approach to Risk-Taking    73

3 Lateral Interdependence: Horizontal Relationship    73

4 Top Management Contact: Vertical-Hierarchical Contact    74

5 Autonomy and Decision Making    74

6 Approach to Performances    74

7 Approach to Rewards    75

Measurement and Evaluation of Cultural Differences    76

Using Cultural Differences Analysis in All M&A Stages    79

Conclusion    81

References    81

Chapter  7  Searching, Screening, and Selection of M&A Alternatives    83

The Process of Search and Identification    83

Establishment of a Business Development Unit    84

Determination of Criteria for the Search and Screening    86

Determination of Search Strategy    92

Independent Search Plan    92

Search through Agents    93

Approaching the Target Company    94

Friendly Approach    95

Making-the-Most-of-the-Opportunity Approach    95

Hostile Approach    95

References    97

Part III  Negotiation    99

Chapter  8  Selection of Target and Negotiation Process    101

Choice of Partner    102

Sources of Information    105

Evaluation of the Target    107

Price Valuation    109

Negotiation    110

References    123

Chapter  9  Extended Due Diligence Examination and Summative Evaluation for M&As    127

The Process and Goals of Due Diligence    127

Extension of the Due Diligence Examination    128

Topics for the Examination of Due Diligence    129

Legal Topics    130

Business and Operational Topics    132

Due Diligence Examination of Organizational Culture    136

Evaluations Regarding Synergy Potential and Realization    137

Chapter  10  Agreements    141

Letter of Intention (LOI) or Memorandum of Understanding (MOU)    141

The Acquisition Agreement    145

How to Be Helped by Lawyers    147

Part IV  Post-Merger Integration and Implementation    149

Chapter  11  Management of Culture Clash    151

Culture Clash Evolution and Stages    151

I Perceived Differences    152

II Magnified Differences    152

III Stereotypes    153

IV Putdowns    153

Managing the Culture Clash    153

Planning Stage    153

Negotiation Stage    154

PMI Stage    154

References    156

Chapter  12  Communication    157

Introduction    157

Communications with All Stakeholders    157

Communicating with External Parties    158

Communicating with Internal Parties    160

Managing Communication    163

Methods and Channels of Communication    165

References    166

Chapter  13  Integration Approaches    167

Introduction    167

Integration and Culture Clash    167

Trade-Off Between Integration and Synergy Exploitation    168

Cultural Differences and Levels of Integration    169

M&A Performance and Integration Approaches    170

A Framework for Integration Approach Choice    172

References    174

Chapter  14  Human Capital Issues and Practices    177

The Human Factor    177

The Effects of Cultural Differences and Level of Integration on

Behavior in an M&A    178

Culture Clash Effects on Behavior    178

Level of Integration Effects on Behavior    179

Nature of Contact    180

HR Issues, Implications, and Actions at M&A Stages    181

Planning Stage    182

Negotiation Stage    183

Implementation Stage    184

HR Practices    185

Training    186

References    187

Chapter  15  M&A Leadership    189

Introduction    189

Leadership Challenges During an M&A    189

The Roles and Skills of Leadership in an M&A    190

Leadership Teams    191

Leadership Skills    192

References    198

Chapter  16  Trust Formation and Change in M&A    201

Introduction    201

Trust in the M&A    201

The Nature of Trust    202

Prior Relationships    203

Negotiation Process    204

Partner Abilities and Competencies    204

Cultural Differences    204

Leadership    204

Process Dynamic and Learning    205

Communication    205

Autonomy Removal    206

Perceived Benefits    206

Consequences of the M&A and Trust    206

References    207

Index    209

 

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ISBN-10: 0-13-301415-0

ISBN-13: 978-0-13-301415-0

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