ACQUISITION PROCESS

Acquisition Process

Acquisition Process

Introduction

International mergers and acquisitions are among the key corporate strategies multinational corporations use to expand, diversify, or consolidate their businesses. An acquisition occurs when an organization acquires sufficient shares to gain control or ownership of another organization. The motivation of acquisitions is essentially to increase and strengthen both buying and selling company's financial health and produce advantages for both companies if both will continue independently. The expectation is that the combination will result in increased efficiency, economies of scale, widening of markets, greater purchasing power and so substantially increased profitability.

Management and Functional issues of Acquisition

To integrate companies following an acquisition, the most important challenges that an organization faced will be appointing the right team, especially the top management people, to structure it appropriately, defining its agenda, and building the trust that enables its members to work well together. Buchanan et al. (2002) identified a range of leadership characteristics that might be associated with successful merger and acquisition outcomes. Organizations who fail to overcome these challenges are responsible for the ego clashes and politics that are often the root cause of spectacular failed mergers. Top-down change fails because there are possibilities that at every step messages get diluted, so that each succeeding one seems less compelling and less authentic. While this may be true in certain circumstances, acquisition still requires direction from the top because this is the only way to initiate change throughout an organization.

As suggested by Rottig (2007), cultural due diligence post-acquisition should be done to determine cultural compatibility in international acquisitions. The most obvious strategy an acquirer may use to avoid cultural problems in international acquisitions is to refrain from acquiring a target if cultural due diligence indicates the cultures of the organizations are incompatible. The values of communication with employees during the post-acquisition ...