What are 3 challenges for executing a merger or acquisition? List, explain, and provide 1 example...

What are 3 challenges for executing a merger or acquisition? List, explain, and provide 1 example (total).

Expert Solution

Challenges in executing M&A Deal

Hindrance to fair Competition: Sometimes post merger businesses tend to become so powerful that they are at a risk of destroying competition from small and marginal traders by commanding huge influence on purchase of raw material and supply chain. In these case decision is with individual country's laws to decide if this deal of merger should go through or not. If it negatively affects consumer & traders rights they make sure deal doesn't go through.

Workforce retention: Mergers may lead to considerable downsizing of workforce in order to implement more effective organizational structure. Employees might also feel scared of changes, management style, leadership or their own roles.Losing high level and influential executives can affect future of merged organisation. Challenge lies in optimization of structure so that best talents stay with org.

Cultural difference/barriers: Today world is a global village, business operates in the same manner also. Sometimes two organisation are based out of different countries merger of which can act as a hindrance in smooth transition. Challenge lies in better screening and counselling of executives at all levels

Example

Recently Dell merged its international services operations with NTT Data globally. Dell was a American org with its own work culture, and NTT Data with its own Japanese set of values. They were poles apart in nature. It was really difficult for the Dell workforce to transition in Japanese work style of working for hours and hours together, because of which labor turnover of merged organisation touched almost 20-30 percent in first 3-4 months at the higher level also. HR team coming to rescue initiated trainings and counselling putting a break to that quick transfers and notices.

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