Merger Business Case and Acquisitions - Research Paper Example

Merger Business Case and Acquisitions This paper aims to define business merger with the help of a case study in addition to the successful and unsuccessful acquisitions. The discussion is build through proper analysis of companies which has been involved in such business dealings. Merger Business Case and Acquisitions Introduction Mergers refer to the state when two businesses combine their business activities to achieve the common goal. In broader terms it is an integration of employees, technologies, ideas, managing processes and other business strategies of two organizations.

These are the core factors upon which the overall success or failure of the merger depends. However, if the merger or acquisition is done without thoughtful analysis, risk management, and complete integration then it results in business aggravation, waste of employees’ strengths and capabilities, huge investments and extensively complex environment. The successful incorporation starts far before the actual merging process and for this purpose diligence is used so as to develop the business plan and new strategies.

The process initiates with the development of teams and employees’ group along with the proper involvement of stakeholders (Mergers and Acquisition, 2009) . The success or failure of any merger and acquisition project largely depends upon its operational aspects which includes people, strategies, technology and process. In addition to this the other factors which influence the merger includes the relationship between people and technology and people with overall business environment. The merger and acquisition process has following fundamental steps: Pre-Merger Planning Planning specifically for merger and acquisition Execution Distribution of targets Releasing the value Case Study Now let’s consider the merger of Hewlett-Packard and Compaq which was declared in 2001.

Hewlett Packard is the leading company in developing new technologies and latest electronic equipments. However, despite of its sound foundations, the company was facing several internal and external managerial issues which were actually influencing its overall operational activities. When the company was established in 1938 since then the prime positions of president and CEO were frequently changed by the two owners of the company i.e. Hewlett and Packard. Later in 1999 Carly Fiorina was elected as the first female chairperson and CEO of the company.

As soon as she acquired the key managerial position she planned for the merger of HP with Compaq. Initially this merger and acquisition was opposed by the two hires of the organization but later the internal condition of the company convinced them to provide their agreement on the subject. It was a stock-to-stock merger where HP acquired 64% shares and Compaq had 36% (The Hewlett-Packard and Compaq Merger: A Case Study in Business Communication, 2001). Out of many merger and acquisitions that took place in last 10 years, the merger of Hewlett-Packard and Compaq turned out to be the most successful.

Within six years of this acquisition the companies were able to increase market share and shareholder value along with acquiring the market leadership. Managerial decisions which were very difficult to be made previously now became easy for both the organizations (Rosen, 2008). Reasons for success There are many factors that contributed to the overall success of the merger and acquisition. Despite of being the market leader and the most innovative organization Hewlett-Packard had some severe weaknesses while on the other hand Compaq computers was efficient enough in its business activities.

The weaknesses of one company were then combined with the strengths of the other consequently a successful merger was witnessed by the business world. Here one thing is of prime notice that during the time of Carly, the merger did not proved to be a beneficial and profitable step, however, as soon as Mark Hurd acquired the position of CEO, the company started to climb the heights of success with an immense rate. Research indicates that the extensive managerial skills of Mark Hurd put both the companies to a leading position.

Consequently if reflects that the managerial skills proved to be the most important constituent of building successful mergers and acquisitions (Rosen, 2008). Successful and Unsuccessful Acquisitions The acquisition of SmithKline Beecham by Glaxo Wellcome turned out to be very successful and profitable for both the organization. The success was specifically measured by the research and development expenditure of the two organizations which was significantly reduced as they both initiated research on collective basis.

Consequently they were able to successfully compete with other companies working in the pharmaceutical industry (Gaughan, 2007). Another successful acquisition was experienced by Pfizer and Wyeth where the active participation of employees further increased the efficiency of R and D department. This ultimately led the organization to introduce the biggest selling drug - Lipitor (Gaughan, 2007). Some acquisitions were successful while others were not such as the case of SIA (Singapore International Airline) and Virgin Atlantic.

This acquisition was failed due to the inconsistency between people and the distribution of dividends (Ang, 2012). Subsequently the acquisition of Autonomy by HP was yet another failed experience due to poor managerial decisions and lack of leadership (Gassee, 2012). Conclusion Research indicates that the key factors which initiates the success or failure in mergers and acquisition includes leadership, positive interaction of employees and proper distribution of dividends and profits. Furthermore the managerial activities in mergers and acquisitions are affected by external environmental forces such as the interference of company hires which happened in the case of HP and Compaq.

Therefore managers are required to deeply consider all the aspects before stepping into merger or acquisition. References Ang, S. (2012, December 13). SIA and HP — Failed Acquisitions. Shares Investment . Gassee, J. L. (2012, December 17). Hewlett-Packard's Meg Whitman is facing an unwinnable fight. The Guardian . Gaughan, P. A. (2007). Mergers, Acquisitions, and Corporate Restructurings. John Wiley & Sons. Mergers and Acquisition (Cognizant Case Study 2009). Rosen, B. (2008, April 9). The Merger That Worked: Compaq and Hewlett-Packard.

HUFF Post: Business . The Hewlett-Packard and Compaq Merger: A Case Study in Business Communication (Brigham Young University September 5, 2001).