MERGER AND ACQUISITION

Merger and Acquisition

Merger and Acquisition

Introduction

Mergers and acquisitions are often associated with changes in the nature of the systems used to determine responsibilities and in individuals' positions within the hierarchy. The ability of management to change the terms and conditions of its workforce following a merger or acquisition is constrained by various factors. While these limit the ability of executives to make unilateral changes to the system it leaves some scope for changes to other aspects of workers' jobs. Not all of the changes to terms and conditions following mergers and acquisitions are necessarily negative, however many changes in job descriptions, new responsibilities and adapting to new organizational structures do have the effects. The consequences because of the changes in cultures are the one that are specifically very significant in the change management beside other consequences facing professional and managerial staff after mergers and acquisitions. The cultural affects every action and reaction the group makes, and it determines, in part, how it will interact with the cultures of other groups. When one company merges with or acquires another-something that has happened with considerable frequency in the printing industry of late-the scene is set for a possible clash of cultures. That's why anticipating and coping with cultural clashes among all parties involved is an essential element for the success of the venture and the long-term health of the newly formed company. Merging cultures can be difficult enough when companies only join on paper as freestanding units of a larger entity. But when the merger involves physically joining two companies into a single facility, or yoking two nearby units to one management team, it can turn into a minefield fraught with organizational hazards.

Although a merger involves a combination of two or more entities, they are rarely equal participants. Sometimes a merger is really an acquisition financed by common stock. Mergers are typically more expensive than acquisitions, with the parties incurring higher legal costs, Hamilton says. There are several ways to structure a merger. In a forward merger, the target merges into the acquirer's company, and the selling shareholders receive the acquirer's stock. In a reverse merger, the acquirer merges into the target company and gets the target company's stock. In some cases a private company uses a reverse merger with a public one as a way to go public at a lesser cost and with less stock dilution than through an initial public offering. In a subsidiary merger, an acquirer incorporates an acquisition subsidiary and merges it with the target company. In a triangular merger, the target company's assets are conveyed to the acquirer's company in exchange for the acquirer's stock. Each of these types of mergers can have different tax and legal consequences, and the acquirer and the seller must seek proper tax and legal advice from experts. A merger and acquisition may not require cash and may be accomplished tax-free for both parties. The seller realizes the potential of the merged entity, instead of being limited to sales proceeds and ...