Management Report: Challenges in Mergers and Acquisitions

This report examines the critical challenges faced during mergers and acquisitions (M&A) between companies, focusing on the case of DeWaal and BioHealth. It delves into issues such as conflicting values, lack of matching mentality, poor planning and integration, and insufficient focus on people. The report highlights the importance of effective staffing processes, resolving conflicting interests, and the crucial role of HR executives in navigating these challenges. It emphasizes the need for cross-cultural competency, open communication, and a clear understanding of organizational culture to ensure a successful M&A. The report stresses the significance of employee-centric approaches and the application of relevant management theories, such as differential efficiency and contingency theory, to foster a cohesive and efficient merged entity. Recommendations include developing a horizontal communication system and hiring external experts to facilitate unbiased decision-making and organizational structuring. The report underscores the necessity for managers to prioritize employee well-being and address concerns promptly to minimize attrition and ensure a smooth transition.

Running head: MANAGEMENT
Management
Name of the Student:
Name of the University:
Author’s Note:

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Executive summary
Merger and acquisition among companies take place for the overall benefit of society. However,
there are many hurdles that the two companies have to overcome while they are about to enter
into an M&A. They will have to focus on the staffing and structuring of their company so that
the existing employees do not suffer from the fear of losing their jobs. Cross-cultural
competency has to develop. Managers have to train their employees to embrace the cultural
differences and support with each other rather than just trying to protect their employees.

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Table of Contents
Introduction......................................................................................................................................4
Discussion........................................................................................................................................4
Conflicting values........................................................................................................................4
Lack of matching mentality.........................................................................................................4
Lack of planning and integration.................................................................................................4
Lack of focus on people...............................................................................................................5
Staffing process...............................................................................................................................5
Resolving Conflicting interests........................................................................................................8
HR Executives functions..............................................................................................................9
The usefulness of management........................................................................................................9
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

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Introduction
Merger and acquisition are essential as it helps in forming a very powerful company with
the brilliance and expertise from other organizations. However, the managers often face issues
like lack of proper planning and control, lack of sufficient funds, cross-cultural issues and others.
This report has dealt with the problems that are being faced by Steve and Kasper. They have
work with each other and try to resolve all the conflicting issues (Light, 2001). In order to form a
successfully merged communion between DeWaal and BioHealth, the two managers must work
over the staffing and create a proper organizational culture.
Discussion
Conflicting values
Lack of matching mentality
It is evident from the given case that there is a difference between the mindset of the two
business owners. Steve and Kaspar want to get into a merger and acquisition for their company
but they lack unity and coherence. Classical management theory abides by the belief that
compensation is the best motivations for the retaining of employees (Khorasani & Almasifard,
2017). However, in this case, it is seen that Kaspar and Steve are not really concerned about
finding out methods that they can use to retain their best employees. Steve shows some concern
but Kaspar seems to be engrossed about other things (Light, 2001). The first conflict is seen
when Kaspar chose the restaurant rather than carrying on the meeting at their office premises
itself. On the other hand, Steve knew how to value punctuality so he arrived on time. In contrary

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to this, Kaspar who loved in a nearby hotel arrive about 15 minutes late and started engaging in
small talks rather than coming directly to the point.
Lack of planning and integration
This is one of the major issues that are faced by the companies while they are trying to
enter in any M&A or merger and acquisition venture. They must contact the best officials
beforehand so that they can at least form the top level management. This top-level management
can later be very helpful for them to take care of the issues that might arise in the subordinate
levels. Human relations theory of management is also being violated in this merger and
acquisition theory. This is because Steve has forgotten to provide moral support to his
employees. However, he knows that employees are the most important and valuable assets of the
organization. For example, Alison is one of the most valued employees of Steve and he knows
that his company cannot run without such an able sales representative like her. Steve failed to
provide any significant moral support to Alison when she seemed worried.
Lack of focus on people
Service companies must make sure that they are following both employee-centric and
also customer-centric approach (Brueller, Carmeli & Markman, 2018). This is because in order
to cater to all the needs of customers they will have to keep their employees happy. In order to do
that the companies will have to focus over a proper relationship development with their
employees. However, Kaspar and Steve were not paying much attention towards solving the
queries or the doubts of their people.

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Staffing process
As per the opinion of (Steigenberger, 2017) staffing is one of the most important aspects
of any successful merger and acquisition process. In order to merge and operate two different
companies, the managers have to make a very long term preparation. They have to keep in mind
that they are going to work with two different kinds of employees having different mindsets and
different business etiquettes. Speed is needed in order to work out the plans and get on over with
the decisions. However, just the opposite thing is seen happening in the given case study. Steve
realizes that Kasper is showing a very reluctant attitude but is unable to say or express it clearly.
Kaspar, on the other hand, is just trying to stretch the conversation longer on the unimportant
matter (Soundarya, Lavanya & Hemalatha, 2018). It seems from the reluctant and unmoved
nature of Kaspar that he is not paying attention to the gravity of the situation.
As per the opinion of Poldrack (2015), differential efficiency theory is one of the most
essential mergers and acquisition theory that talks about the ways of increasing the efficiency of
one firm with the help of other. In other words, if firm X is having greater competency level than
firm y then the merger will be done based on the hope that firm X will provide all possible
support to firm Y in order to help them increase their efficiency and competency as well. This is
one of the most important and crucial objectives of any merger and acquisition. This will ensure
that their M&A is able to promote social and economic gain as well (Ahmady, Mehrpour &
Nikooravesh, 2016). Steve and Kaspar both were working at well-developed drug stores in order
to help patients fight with AIDS and other such diseases. However, DeWaal and BioHealth
would have been a very successful and power merger if the two respective owners were more
planned and organized in their approaches. Kaspar has not focused on any of the business-related
issues throughout the entire scenario thus violating the differential efficiency theory.

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As per the opinion of Voegtlin and Greenwood (2016), people or employees are the most
important aspect of any organization. In particular, for service companies like any medicine or
drug store, it is even more important to make sure that the employees are getting all possible
support. A successful merger and acquisition will depend largely upon the staffing and the
structuring of the company (Bal & De Lange, 2015). This is because it is very natural for staffs
to know where are they actually going. As stated by Otley, (2016), it is a known fact that during
merger and acquisition of any two companies there have to be some promotions, some
demotions and even some attrition from the two companies (Tarba et al., 2016). This is because
the companies will have to form some new job posts and make sure that they are appointing the
best employees for their work.
They have to focus over forming at least the top management so that these officials can,
later on, take care of any issues that are arising in the lower levels. However, in order to do this,
the two merging company owners have to undertake a huge, in-depth and extensive analysis.
They have prepared the new job posts that will be formed, the employees to be appointed for
these posts, the existing employees who are to be dismissed and many other such criteria. The
managers will also have to work over finding the alternative job opportunities that they have to
offer to the employees whom they will be dismissing from the newly formed merged company.
Granlund and Lukka (2017). has also stated in this context that the respective owners of the
companies have to show their responsibility in answering every question for their employees.
However, it is seen in the given case study that Kaspar was not at all concerned about performing
sound staffing for their newly merged company.
On the other hand, Steve must have planned or organized his staffing and structuring
system long back. He must have avoided giving random, uncertain and arbitrary solutions to his

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employees like the casual answer that he gave to his employee Alison when she seemed worried.
The reply given by Steve was- “I can’t guarantee anything, but I want you in this organization.
Pick up the phone anytime you’re bothered, but don’t look for another job. And come see me if
you’re offered one (Light, 2001).”
This shows the unplanned and the unprepared nature of Steve. As per the opinion of (Whalen et
al. 2016) contingency theory is used by some companies in order to create a sound management
system. It has been seen that those organizations that are having a better organizational culture
than their competitors usually use the technological aspects in their setup. In order to work over
the decision-making skills, the modern organizations use methods like secret ballot voting,
personal chat systems, social media forums, and other such mediums to get the valuable opinions
of the employees (Tarba et al., 2016). Steve must have also made use of the modern and
advanced technologies in order to establish an open, flexible horizontal communication system.
It must be noted that, if talking to so many staffs is difficult for Steve, then he must have at least
hired some of the top official members who would have cascaded the opinions and the feedback
from the employees to the managers and vice versa (Suddaby, 2015). None of the managers have
been able to look beyond their cultural boundaries. They have to understand that in order to carry
on their merger and acquisition in a sound manner they will have to strike a proper balance
between their culture and the other external cultures as well. Both Steve and Kaspar will have to
understand and embrace the cultural differences that exist among different cultures (Sarala et al.,
2016).

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Resolving Conflicting interests
 Kasper will have to develop a sense of responsibility and accountability towards his
people and his people. He will have to get rid of his reluctant nature (Vasilaki et al.,
2016). On the other hand, Steve will have to get over his unexpressive nature. Effective
Communication must be developed in order to include the employees from both the
companies in the merger and acquisition phase. It is recommended that both Steve and
Kaspar develop a horizontal communication system that will help them in getting
feedback and the opinion of all their employees (Ashkenas et al., 2015). This will also
help in checking the employee attrition rates as the employees will get a feel of
assurance. They will know that they can reach out to their managers whenever they feel
like.
 Cross-cultural competency must be developed so that both Steve and Kaspar can
understand the cultural differences existing between the two companies. This will help
them in creating a certain level of unity among the employees.
 They have to work with speed so that the merger and acquisition process goes on at a
faster pace. They have to sit together and find out their areas of interest and areas of
conflict rather than focusing on the unnecessary details.

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HR Executives functions
 HR Executives and the two senior managers have to make sure that they are hiring
experts in order to help them arrange the new organizational structure. In particular, they
will have to focus on making the top structures first (Reilly & Williams, 2016).
 To ensure that all the decisions are taking in an unbiased manner, external experts are to
be hired who will be able to judge the past performances of the employees and give the
right suggestion of whom to keep and whom to release from the newly merged company.
 HR managers have to plan out which are the most important and the less important
works. It is the duty of the HR managers to see that they are not overlooking the welfare
or the interest of any of the employees coming from each of the company.
Usefulness of management
The contingency management theory will be very helpful in creating a proper and open
channel of communication. This will help the organizations to check the employee attrition rates.
If employees realize that their managers are catering to all their concerns then they will be loyal
towards the company (Young-Hyman, 2017).). They must use modern scientific communication
platforms like chatbots, office group, and employee forums to get proper feedback about the
opinion of their employees.
Human relations theory is of utmost importance for this merger and acquisition as there is
a lack of cross-cultural competency among the employees and the managers as well. The
managers have to provide moral support to their employees. They need to be reassuring and
certain about the answers that they are giving to their employees. Thus adopting this theory will
help them to make their employees know that they are the valuable assets of the organization and

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the company owners will look after their welfare. Thus if the M&A needs to dismiss some
existing employees then they will have to be supported financially and also morally by their
managers.
Conclusion
Thus it can be concluded that both the two companies DeWaal and BioHealth have the
potential of making a successful merged company. However, they need to work over their
planning and organizational skills. They have to hire experts externally who will be helping them
to undertake an in-depth analysis of the individual employee performance and set the structure
for the newly made merged company.

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