Case Study: Integration Problems in Mergers and Acquisitions Analysis

This case study delves into the integration problems faced during the merger of DeWaal Pharmaceuticals and BioHealth Labs. It examines the leadership failures of CEOs Steve Lindell and Kasper van de Velde, who struggle with communication, employee retention, and conflicting values. The analy...Read More

MERGER AND AMALGMATION
INTEGRATION PROBLEMS IN MERGERS AND ACQUISITION
Merger and Amalgamation issues
Name of the Author-

Table of Contents
INTRODUCTION.................................................................................................................................1
LITERATURE REVIEW......................................................................................................................1
INTEGRATION PROBLEMS IN MERGERS AND ACQUISITION..............................................1
PROCESS THAT IS BEING APPLIED TO WORK OUT THE DETAILS OF THE
INTEGRATION................................................................................................................................2
RECOMMENDATIONS FOR RESOLVING CONFLICTING VALUES.......................................3
PROCESS RECOMMENDED TO THE TWO TOP EXECUTIVES AND THE HR PEOPLE
THAT CAN BE FOLLOWED TO WORK OUT THE INTEGRATION..........................................4
USEFULNESS OF THE MANAGEMENT AND ORGANISATIONAL THEORIES.....................5
Conclusion.............................................................................................................................................6
REFERENCES......................................................................................................................................7

INTRODUCTION
With far reaching developments that are being made in the business these days,
strategic alliance of mergers and acquisitions have been taken into consideration in this
competitive busienss world to compete with the rivals. The merger and acquisitions have
been used by big business organization as competitive corporative strategy throughout the
time and these have been gaining momentum in ramified economic development. But, apart
from the name, nothing is simple about this concept. Wide number of problems and issues
come along. All these are discussed in the current report as answers of the specific questions.
It is analyzed that everyone in the field of management has somewhere theoretically read or
practically experienced the fact that the management theories play a vital role in the
management of any organisation and undertaking the merger and amalgamation in
organization.
LITERATURE REVIEW
INTEGRATION PROBLEMS IN MERGERS AND ACQUISITION and
CONFLICTING VALUES THAT ARE AT STAKE IN THIS CASE
The case study of merger proposed between DeWaal Pharmaceuticals and BioHealth
Labs have put forward certain conflicting issues that are common in various mergers and
acquisitions. The fine leadership required for any good management is missing badly as the
respective CEO’s of the two merging companies are not geared up to take their authoritative
position perfectly in a manner that can add value to the step of merger. As per the perception
of Drew, Kortt, & Dollery, 2016) it is reflected that there is no speed in the way things are
being managed as focus is all on the regulatory aspects, then on the important issues like
retaining of the talented professionals, irrespective of their cultural background and
resemblance; formation of a harmony between the two company’s CEO’s to bring the
decisions in the line of mutual benefit; generation of faith in the staff to let them stay in the
changing and much difficult scenarios, and etc. The strategic alliance helps organization to
win over the competitive rivals and strengthen the overall outcomes and efficiency of the
busienss. However, the main integration problem which is ideally faced by organization is
related to adaption with the advance system and mixed culture. However, while merging with
other organization, there may be issue related to culture, social aspects and adaption of
business value chain activities.

There is a huge communication issue that is lying. Steve is unable to communicate
properly with his talented lot of team. This way he is losing the gems of his team whom he
require the most at that hour. He is facing employee retention problems, as the employees are
afraid of the policies that are governing the selection and retention process. There is no
knowledge being forwarded to the team regarding the manner things are done and they are
not brought in favour of the same. Moreover, the cultural problems are way too big to deal
with. The CEO’s are more willing to choose people they find most resemblance with and less
priority are given to merit. These all issues could be managed by organizations by changing
business policies, organizational culture and undertaking proper training and development
program.
PROCESS THAT IS BEING APPLIED TO WORK OUT THE DETAILS OF THE
INTEGRATION
Steve Lindell and Kasper van de Velde being the CEO’s of the two merging
companies, BioHealth Labs and DeWaal Pharmaceuticals respectively, seem very lousy at
the integration process. None of them has a formal integration plan laid out to be discussed
upon. A horse trading is being followed right from the initial phase. Steve fell short of the
communication skill to deal with Kasper’s politics of keeping his staff and units ahead of the
former. As mentioned earlier, the process being followed is more focused on the regulatory
aspects than the preliminary and primary ones. The decisions are being made obnoxiously
rather thoughtfully. An informal lunch meeting is conducted to discuss upon the serious
matter of hiring of the most important top management. The process starts with the passing
resolution by the board of directors of company and implementing the proper development
program to encounter all the issues and problems in effective manner. This will not only
increase the overall outcomes but also lower down the complexity of the process. However,
setting up the special department to mitigate the merger and amalgamation process will be the
best possible method.
The time taken to make the decision is too long to be good for success of the merger.
As per the perception of Kaul, (2017), it is reflected that there is no particular process that
they are going on board with for the merger and amalgamation. A business discussion is
made for the Asian part, where Steve’s projection of retaining Bangalore unit of DeWaal
rather than the Bombay unit of Bio Health with his man Vijay Naipaul heading the same, and
the losing of DeWaal’s Indonesian plant were laid off by Kasper. Kasper with dominance on

the view of not closing the Indonesian plant also caves down Steve on the proposition of the
person heading the Bangalore plant. The whole thing is done with no deadlines at all. Even
Steve is popping with a view to fix positions for the time being without any scientific and
professional approach and fix things later when all regulatory work will be done for. As per
the views of Khorasani, & Almasifard, (2017), it is revealed that the top team of talented
people of these two companies are not being informed about the process that the CEOs are
planning to phase out the dilemma of retaining whom and positioning the retained staff where
and how. The reasons seem pretty certain that the CEOs themselves have not worked on a
process yet and do not know what is to be done to get the best out of the merger that can do a
favourable thing for the shareholder’s value. The whole idea is to decide among the better of
the two people that are available for every post that’s vacant in the newly merged company.
It is analyzed that if company does not follow proper rules and regulatory requirements then
it may destruct the transparency of company. The lack of transparency may not only hamper
the business process but also increases the possibility of insider trading. The main impact of
insider trading is seen on the long term sustainability of Organizaiton which might negatively
impact the return on capital employed of organization in long run.
RECOMMENDATIONS FOR RESOLVING CONFLICTING VALUES
As stated by Galpin, & Herndon, (2014). It is divulged that the various values that are
being conflicted unintentionally in the due course of merger have been discussed above
already. There stands a need to resolve those values by every possible means. The various
recommendations that can work for the same include:
 As per the views of Steiner, Kaiser, & Eythórsson, (2016) it is reflected that the focus
should be placed on the merit that the executives that are proposed to be chosen possess. The
cultural difference is bound to happen, but they should be avoided in order to attain a point
where the team selected is full of potential to add to the stakeholder’s value as a whole. The
required competencies out of the heads of every process or plant need to be defined first and
then selection must be made.
 The selection process must be wholly objective, beyond the biasness of prior business
relationships. The favour should be done for the executives that carry the required skill set
and the way the CEO’s are currently behaving while promoting their old team members
should be done away with.

 The standards that are set by other leading companies of the world in the same
business regarding the role and skill sets of the executives required to be hired must be used
as a reference. Only those executives must be selected whose potential stand up to the mark
as per standard. There should be proper transparency and structured regulatory compliance to
lower down the complexity of the process.
 Fresh interviews must be arranged. This way the potential executives shall be able to
show their abilities and expertise in a much better way. They shall not feel offended for the
process that the company’s CEOs are following. They will be taken in confidence and this
way they would not think of leaving their employment with the newly merged company. It
will provide organization with the talented employees who will strive towards increased
business outcomes and aligning the interest of stakeholders with the organizations
development.
 Further, after the employees are informed of their new positions, they must be offered
good and early benefits apart from the pay, to provide them with an incentive to stay
(Bergamin, & Braun, 2018).
PROCESS RECOMMENDED TO THE TWO TOP EXECUTIVES AND THE HR
PEOPLE THAT CAN BE FOLLOWED TO WORK OUT THE INTEGRATION
As stated by Kaul, (2017), it is reflected that there is a chaos in the whole thing that is
done by the two top executives while the integration is managed. A properly placed process
needs to be drawn to get the desired results and make the overall process smooth and
successful. First and foremost, a requirement chart should be phased, wherein the vacant
positions for the top executives are laid. After that the requisite skills that every post demands
must be figured out. A checklist is the best option that can be followed.
As per the views of Steigenberger, (2017), it is refelected that for the selection
process, a formal method of fresh interviews should be adopted. The CEOs should go on
following a tiered process. The top most layer of the management should be first selected by
them. When the second layer comes down, the help of the top management must be taken to
select the second layer. The whole process must be communicated to the executives who are
expecting their positions in the organisations. Even after the selection is done, the selected
employees should be personally met to solve any grievances they have. They should be made
to understand the benefits that shall follow if they accept the positions offered to them. The
short-term and long-term, both kinds of incentives must be laid out. The employees must be

made aware of the professional build up, that their profiles shall advent after the positions
they are offered on merger. Every possible thing must be done to retain the talented people,
as it will eventually build the human resource layer and reduce the training costs.
USEFULNESS OF THE MANAGEMENT AND ORGANISATIONAL THEORIES
As everyone in the field of management has somewhere theoretically read or
practically experienced the fact that the management theories play a vital role in the
management of any organisation. There are a number of theories existent on management that
help an organisation to achieve the kind of management and direction needed for the
achievement of goals. The various theories include the scientific management theories,
bureaucracy theories, and the administrative theories. The scientific management theory has
eliminated the rule of thumb, i.e. the old methods are now being eliminated and more
practical management techniques are required to be followed. As seen in the case study
above, the two top executives were just following the rule of thumb to get the selections
done. But they need to get more scientific in order to achieve the proper selections from the
whole process. Further, this theory promoted the decentralisation of management, i.e. like the
workspace is shared by the management and workforce; similarly the workload should also
be shared. CEO needs to understand that there is no accelerating way things that are being
managed as focus is all on the regulatory aspects, then on the important issues like retaining
of the talented professionals, irrespective of their cultural background and resemblance;
formation of a harmony between the two company’s CEO’s to bring the decisions in the line
of mutual benefit; generation of faith in the staff to let them stay in the changing and much
difficult scenarios with a view to create synergy in the process system of post-merger
organization. As per the views of Thompson, (2017), itt is reflected that the bureaucracy
theory is kind of traditional approach wherein there lies supervision of the lower positions is
done by the higher positions in order to supervise them well. The workforce gets the work as
per their areas of specialisation, which helps in getting the work done faster and with ultimate
precision. The work done is by specialised employees and hence the chances of bad output
are less. The limelight of this theory is a belief that an impersonal relation must exist between
the employees and the management. This goes a long way in ensuring that there is no
prejudice in the positions offered and work expected. This is the urgent need of the newly
merged company, as there is prejudice and pre believes regarding the employees being
followed in the selection process.

As per the Shafritz, & Jang, (2015), it is reflected that the administrative theory on the
other hand specifies the role that the management has to play in its basic functions being
forecasting, planning, organising, commanding, coordinating and controlling. Several
principles are laid on how these roles can be done perfectly. The advantage of this theory is
that the management can ensure right work is being done by them at the right stages of
management of a particular project of the day to day affairs. There is specialisation and
division of labour promoted in this theory also which could support the undertaken merger
and amalgamation program.
Conclusion
After evaluating all the details and merger and amalgamation cases, it is inferred that
two companies amalgamate with a view to strengthen the overall outcomes and efficiency in
long run. The main crux of the merger proposed between DeWaal Pharmaceuticals and Bio
Health Labs related to that fact that these both companies have put forward certain conflicting
issues that are common in various mergers and acquisitions. The main issue which arise was
related to setting up the structured program for the employees of two different Organizaiton
while operating their business as one. There are several theories such as scientific
management theories, bureaucracy theories, and the administrative theories which have also
assisted to understand the pre and post-merger concepts and impact on the stakeholders
which needs to be considered by the key managerial person in effective manner. It is inferred
that if proper policies and regulatory set up program is made in the process system and
developed training given to employees then it will assist organization to mitigate the
amalgamation and merger issues in effective manner. Therefore, it could be inferred that
merger and amalgamation could be negative if it is not undertaken in proper effective
manner.

REFERENCES
Bergamin, S., & Braun, M. (2018). Integration Management in Mergers and Acquisitions:
Success Factors and Pitfalls. In Mergers and Acquisitions (pp. 1-31). Springer, Cham.
Boyle, R. (2016). Re-shaping local government–Overview of selected international
experience with local government reorganisation, mergers, amalgamation and
coordination. Institute for Public Administration, Local Government Research
Series, 10.
Bruno, G., Genovese, A., & Piccolo, C. (2017). Territorial amalgamation decisions in local
government: Models and a case study from Italy. Socio-Economic Planning
Sciences, 57,(1) 61-72.
Drew, J., Kortt, M. A., & Dollery, B. (2016). Did the big stick work? An empirical
assessment of scale economies and the Queensland forced amalgamation
program. Local Government Studies, 42(1), 1-14.
Galpin, T. J., & Herndon, M. (2014). The complete guide to mergers and acquisitions:
Process tools to support M&A integration at every level. John Wiley & Sons.
Kaul, M. (2017). Note Unnote-Recent Developments in Indian Companies Act. Ct.
Uncourt, 4(1), 22.
Khorasani, S. T., & Almasifard, M. (2017). Evolution of management theory within 20
century: A systemic overview of paradigm shifts in management. International
Review of Management and Marketing, 7(3), 134-137.
Nakazawa, K. (2016). Amalgamation, free-rider behavior, and regulation. International Tax
and Public Finance, 23(5), 812-833.
Schaap, L., & Karsten, N. (2016). Evaluating municipal mergers’ effects: A review of
amalgamation studies in the Netherlands. 3(5), 82-88.
Shafritz, J. M., Ott, J. S., & Jang, Y. S. (2015). Classics of organization theory. Cengage
Learning.

Steigenberger, N. (2017). The challenge of integration: A review of the M&A integration
literature. International Journal of Management Reviews, 19(4), 408-431.
Steiner, R., Kaiser, C., & Eythórsson, G. T. (2016). A comparative analysis of amalgamation
reforms in selected European countries. In Local Public Sector Reforms in Times of
Crisis (pp. 23-42). Palgrave Macmillan, London.
Thompson, J. D. (2017). Organizations in action: Social science bases of administrative
theory. Routledge.