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Comparing and Contrasting M&A Failures

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Prepare a paper in which you compare and contrast M&A failures.

a. In your paper, discuss the reasons why an M&A fails (technical and legal insolvency, and bankruptcy).

b. Once the failure of an M&A occurs, what happens to the assets of both companies? In your paper be sure to consider what happens to the stakeholders, image of the company, price per share, market share, company assets, position in the industry, goodwill, and service capability within the industry.

c. In your paper, be sure to compare and contrast the two to three forms of corporate restructuring. Would you recommend any of the following? Be sure to defend your position:
1) Spin-offs
2) Divestitures
3) Liquidation
4) Carve-out

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Mergers and Acquisitions

M&A Failures

According to David Gebler (2009) most mergers and acquisitions fail (p. 10). One of the factors which has the most significant impact on the success or failure of a merger is whether the new management is able to integrate the culture of the two pre-merger organizations. Gebler (2009) listed ten dos and don'ts that the acquiring company can adopt. This list he called the "ten merger commandments" and they are "1. Don't act like a conqueror. 2. Find out what makes the new team tick. 3. Take it one function at a time. 4. Integrate, don't alienate. 5. Get acquainted. 6. Understand what drives talent. 7. Don't assume you will be heard. 8. Bridge the gap. 9. Lend an ear. 10. Anticipate some clash." (Gebler, 2009, p. 11).

It is interesting to observe that the clash of cultures is not an issue exclusive to mergers of private firms, but also of government agencies. Baugh and Finzel (2009) illustrated how the clash of cultures made the merger of two United States Army Acquisition Project Offices, which happened in 2002, a challenge which was more than anticipated and planned (p. 11). However, this observation is not surprising since it is common to have two divisions within a firm to have different culture. Unfortunately, the two US offices not only have different cultures, but also diverse ones. The study analyzing the merger of these two offices concluded that "the failure to adequately address - and often even consider - a wide variety of people and cultural issues is at the heart of unsuccessful mergers, acquisitions, and transformations" (GAO, 2002, p. 16). However, Baughn and Finzel (2009) opined that "[there] is no absolute way to manage a successful merger, but if a complete understanding of the organizational culture is ignored, the negative results may be significant" (p. 13).

Another factor that contributes to why post mergers and acquisitions companies fail to realize the expected benefits from the consolidation is over optimism. Dan Hill (200) opined that "[successful] corporate change involves changing both hearts and minds because human capital is at the heart of the equation" (p. 1). When management puts too ...

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