The Impact of Mergers and Acquisitions on Aldar Properties

This report provides a literature review on mergers and acquisitions (M&A), defining the processes and highlighting the differences between mergers and acquisitions. It explores the strategic management aspects, advantages, disadvantages, and reasons behind M&A, including synergy and the elimination of competition. The report categorizes different types of M&A and outlines the stages involved in the process. It then focuses on the opportunities M&A presents for Middle Eastern companies, specifically Aldar Properties, examining how these acquisitions can lead to growth through financial resources, cost reduction, and improved market share. The report analyzes organizational structures, comparing the matrix structure of Aldar Properties before acquisition with the cluster structure expected after the acquisition. It also discusses change management, including resistance to change and the Kurt Lewin model. The report includes figures illustrating the matrix and cluster organizational structures. The report is based on the provided assignment brief, and the student's work is presented here for educational purposes.

Running head: MERGERS AND ACQUSITION
MERGERS AND ACQUSITION
Name of Student
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Author Note

1MERGERS AND ACQUISITION
Literature Review
Mergers and acquisition
Mergers and acquisition refers to the process of transfer of ownership from one company
to other or consolidating the company’s ownership with other company’s ownership. Business
organization carries out this activity of mergers and acquisition for the purpose of changing the
nature of its business and to gain a competitive advantage over its competitors with the help of
the same (Bettinazzi and Zollo 2017). It is a part of strategic management as with the help of the
Mergers and acquisitions the company can downsize its business or even grow. The major
difference between mergers and acquisition is that mergers refer to consolidation of the two
businesses such that one new business can be formed as a result of such mergers (Andrikopoulos,
Gregoriou and Kallinterakis 2016). On the other hand, acquisition refers to taking over the
ownership of another company’s stock and others. Another major difference between merger and
acquisition is that in case of one, there is the process of placing ones business under the
ownership of other company however, in case of mergers both the companies get equal share of
ownership (Burton, Obel and Haakonsson 2015). The main advantage of this mergers and
acquisition is that the companies can share each other’s resources and they also need to share the
liabilities. Mergers and acquisition affects organizational structure and behaviour, reframing,
change management, HMO agreements, strategy for the same proper leadership to look after all
the activities (Davenport and Barrow 2017). There are different advantages and disadvantages
related to the acquisition and mergers. Some of the major advantages of mergers and acquisition
are that the two companies can also merger their resources and therefore helps both the
company’s to take advantage of the same. The main disadvantage however is related to risk of

2MERGERS AND ACQUISITION
loss of ownership by either party (Crasnic, Kalyanpur and Newman 2017). There are different
reasons for mergers and acquisitions some of the major reasons include to create financial
synergy, to take advantages of economies of scale, mergers and acquisitions lead to
diversifications and various other benefits (Park 2019).
Synergy
When companies undertake mergers and acquisition, they can take the benefits of
financial synergy, performance synergy and various other synergies resulting from availability of
huge amount of resources and others (Reddy and Xie 2017).
Eliminate unnecessary competition
With the help of mergers and acquisition, the companies can avoid unnecessary
competition and this allows the company to acquire a greater market share and to offer better
commodities to the customers and therefore leads to increase in sales (Meyer and Peng 2016).
There can be different types of mergers and acquisitions such as based on the functional
roles-these include horizontal, vertical and conglomerate, on the basis of outcome of business,
there can be mergers and acquisition and includes- consolidated mergers and statutory mergers.
There are various other types of mergers such as- strategic mergers, acqui-hire and equals
mergers. However, not all mergers and acquisitions are successful and hence a lot of factors need
to be considered before carrying out merger and acquisition and there is a process for the
carrying out proper merger and acquisition (Reilly and Williams 2016). There are five main
stages in the same- The process begins with pre-acquisition requirements that involves carrying
out proper self-assessment to identify the needs for M&A (Sindi et al. 2019). The second step
involves screening and searching suitable company for this purpose of merger and acquisition,

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the third step is investigation of the chosen company to gather necessary information about them.
The fourth step involves carrying out proper negotiations with the chosen company and entering
into a merger or acquisition agreement.
Growth
Mergers and acquisition leads to growth many times because of improved organizational
capacity and also when one reputed organization acquires another, the other can take advantage
of the goodwill associated with the acquiring company (Stanton 2019). Moreover when a big
company acquires small company it can help it to increase its sales and grow through making use
of the financial resources and other resources.
Reducing additional costs of the supply chain
In case of acquisition and mergers, the company can purchase a supplier or even the
distributor and therefore avoid additional costs due to other participants in the supply chain. It is
called the vertical merger, and it helps in avoiding the costs that the supplier was previously
adding (Lebedev et al. 2015).
Opportunities for Middle East country companies and the Aldar properties:
Mergers and acquisitions have unprecedented opportunity for all the Middle East
companies and especially Aldar properties because these will provide many benefits to the
company such as an expansion in the financial resources and many others (aldar.com 2019).
Aldar properties have recently undergone some major acquisition that has given it an opportunity
to add value to its portfolio. These acquisitions are expected to improve the estate sector of Abu
Dhabi and therefore help in developing the nation as a whole. In fact this move of the Aldar

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properties shows the consolidation efforts of the real estate of UAE real estate. Issues of
oversupply and due to unfavourable economic conditions there is many problems related to
reduced sales and lower value of rents and others and in order to overcome the same most of the
companies of the Middle East are entering mergers and acquisitions in order to overcome these
problems caused by the economic conditions (Verhoef 2018). All these mergers and acquisitions
that have been undertaken by the company and that will be undertaken by the company will help
it to grow through its recurring revenue and will also help it in managing its assets properly.
Organizational structure and behaviour
Organization structure refers to the way in which most of the company activities are
aimed at achieving the organizational objectives and these activities include task allocation,
supervision, coordination and many other activities. It lays down the basis for routine activities
and the standard operating procedures and therefore has an impact on the organizational
activities and operations(Waring 2016) . It determines the extent to which the individuals views
affect the actions of the organization and also determines who takes part in the decision making
process. However, a major determinant of the organizational structure is the objectives of the
organization. The organizational structure determines which job position, function, job role and
others will be allocated and the responsibilities of each position function in the organizational
structure. There are different types of organization structure such as matrix structure, hierarchical
structures and many more and these have their own advantages and disadvantages. The present
organizational structure of the company Aldar properties is the matrix structure. A matrix
structure is one which supports free flow of communication between the different levels of
organizational structure and it is one in which the relationship between the different levels is in
form of a matrix as compared to the traditional hierarchy structure (Klein and Kahn 2017). There

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are also dual reporting relationship between the employees of different levels of the organization
this organizational structure provides more flexibility because the employees of one department
can interact with people from other department (Burton, Obel and Haakonsson 2015). Since
there are different employees working from different departments the solution is more effective
and efficient.

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Figure 1: Matrix structure of organization
Source: (aldar.com 2019)
However, after the merger the company will have a cluster organizational structure. In
cluster organization structure there is a permanent working unit and there are temporary teams
that comprises of members with complementary skills. The members are mostly dispersed across
different parts of the world and they are assisted in their work with the help of intranet and
others. In this structure, there is flexibility of operations and there is lack of bureaucracy. There
are three main boards under a cluster organizational structure monitoring and coordination board,
advisory board and board of technic scientific. The main work of the monitoring and
coordination board is to propose new ideas, revise those from time to time once they have been
confirmed and provide proper timely action in case of different critical situations. A cluster
management can also be used for this purpose. Therefore the major activities include project

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monitoring, proper implementation of projects and development of new of service lines. The
next board is the advisory board whose main work is to formulate and implement a cluster
strategy. There are different regional members for this purpose and they help in coordinating all
the activities of all the other boards. There is a chairman selected for this purpose that takes part I
all the meeting of the monitoring and coordination board. The main work of the board of the
technic and scientific is to support those decisions taken by the Advisory board. The members of
this board have good technical and scientific skills. These people help in developing the best
practises and other activities.
Monitoring board advisory board technical and scientific board
Monitor project formulating and implementing cluster strategies supporting decision
Implement projects
Propose new projects
Figure 2: The cluster organizational structure
Source: (Created by author)
Therefore when a company’s organizational structure changes as a result of mergers and
acquisitions it is called reframing the original organizational structure into a new one. Each
company has its own organizational structures and when they undertake mergers and acquisition
there is a resulting organizational structure. In case of Aldar’s corporate acquisition with other
Company to include three golf clubs under its portfolio, the company had a matrix structure prior

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to the acquisition and it is going to have cluster structure after the same. Organizational design
has become a top priority for all the Middle East companies. Due to all the changes such as
digital technology changes, changes in workforce demographics and others, companies are now
changing their organizational structure and leadership style and much more.
Change management
Change management becomes important in case a company undergoes various forms of
mergers and acquisitions because there are many changes taking place so it becomes important to
manage the human resources, structure focused changes and other changes in the organization
(Hayes 2018). The changes that take place in the organization during mergers and acquisitions is
that of systems dynamics because there are changes in the IT systems and many others that
requires change management, there are many structured focused change related to the same,
there are many changes that are related to the persons, there may be changes in the government
policies that affect the organization, and other forms of changes. The main problem that arises as
a result of so many changes is resistance to change. People resist these changes because of many
reasons such as fear of unknown, fear of uncertainty, fear of becoming obsolete, due to improper
communication, due to lack of confidence in management, lack of proper support from the
management. This resistance to change can make it difficult for the organization to carry out any
change effectively and efficiently. In order to manage the change properly in the organization,
the Kurt lewin model is used. According to the kurt Lewin model, it helps an organization to
change from a particular state of existence to a desired state of existence. There are three main
stages in the kurt lewin model, the unfreeze, the change and refreeze. In the unfreeze stage of the
Kurt lewin model, it involves creating a need for change within the organization and its
employees such that the employees feel that there is a necessity for change and creating a

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psychological sense of guilt in the presence state of existence. This sense makes them feel that
they need to change in order to achieve the desired state of existence. The next phase in the Kurt
lewin model is the stage of change or the stage where the change actually takes place. In this
phase the change is implemented and this is the most difficult stage because the people are not
ready to face reality and this is the phase when the people of the organization are taught new
behaviours, new thinking ways and much more. Once the people have gone through the stage of
unfreezing it becomes important to actually bring changes to their behaviour, process and other
characteristics such that they can be taught new behaviours, processes and others to achieve the
organizational objectives. The last phase is that of refreezing where the employees in the
organization have learnt new behaviours, processes and other characteristics, it becomes
important for the organizational leader to reinforce those new behaviours, process and others
such that these can be stabilized. This is the most important stage according to Kurt lewin
because it ensures that people do not go back to actual behaviours and for that various actions
need to be taken by the leader. The role of a leader in this stage will be to create a culture that
reinforces the new behaviour, processes and others (Jap, Gould and Liu 2017). Therefore in
order to manage the changes properly, the company under study can adopt this model. By doing
the same the company will be able to carry out its change effectively without facing any
resistance to change. The following diagram shows the three main stages of change management
according to Kurt Lewin.

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Figure 3: Kurt Lewin Model of Change
Source: (Cummings, Bridgman and Brown 2016)
HMO agreement
A HMO or a house in multiple occupation is one where many occupants together occupy
a piece of property such that they do not belong to the same family but share all the different
amenities. Some of the common amenities may be kitchen and others. It is divided into various
parts such as bedrooms and others. It is similar to flat occupancy that are majorly occupied by
one family. HMO licensing is needed before using a piece of property in the same way.
However, for properties to get this license, they have to fulfil certain criteria and meet standards
such as fire doors, smoke detectors and many others. These standard’s however various from one
part to another in different countries. For instance in some areas properties get this license when
they have three tenants and they share some amenities. The company under study carries out
various such housing and property facilities. It helps the landlords in finding the tenants who will

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be suitable for the landlord’s property and it helps the tenants in finding the best location with
their available budgets. Since the company is entering into a corporate acquisition, it is adding to
the portfolio of the company. It therefore aims at meeting the needs of the customers in a better
way. When acquisitions like these takes place, it becomes necessary to enter into HMO
agreements because it will help to provide better services to the customers.
Leadership
Leaders play a very important role during mergers and acquisition because they are the
ones who can lead the company properly during such situation. Mergers and acquisitions are
events that involve high degree of risk (Berkow 2017). For success of these events require
operations in alignment of the goals, approach for mitigating risk, a proper culture, and other
activities. For the mergers and acquisitions to be successful it is important to have leadership
integration. Mergers provide great opportunities for development of leadership qualities. It helps
in developing the technical and leadership skills. Mergers often lead to capability building of
leaders that further lead to proper leadership integration activities. It has been observed that
when leaders are capable they can carry out leadership integration in a better way such that a
stronger and a unified team can be built (BOGDANOV 2018). And that further helps in
improving the overall performance of the company. It has further been noted that organization
right have proper capabilities are more likely to achieve their targets of cost reduction and create
synergy. The concept of integration leadership involves carrying out operations in such a way so
as to have an impact over the individuals. This approach also involves showing the big picture to
the employees such that they can understand what is expected from them and what the leadership
will be like in a few year’s. For successful leadership integration to take place, there are three
major groups of leaders who require proper development to carry out their integration role