HR issues in Mergers & Acquisitions

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Document Description
This project is an analysis of what are the various issues that a HR department faces with respect to the Human Capital within their Organization when they decide to either amalgamate or acquire with some other company.
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  P a g e| 1 1.INTRODUCTIONTOMERGERSANDACQUISITIONS INTRODUCTION TO MERGERSAND ACQUISITIONS All our daily newspapers are filled with cases of mergers, acquisitions, spin-offs, tenderoffers, & other forms of corporate restructuring. No firm is regarded safe from a takeoverpossibility. On the more positive side Mergers & Acquisitions may be critical for thehealthy expansion and growth of the firm. Successful entry into new product andgeographical markets may require Mergers & Acquisitions at some stage in the firm'sdevelopment. Successful competition in international markets may depend on capabilitiesobtained in a timely and efficient fashion through Mergers & Acquisition's. MERGER Merger is defined as combination of two or more companies into a single company whereone survives and the others lose their corporate existence. In other words, two entitiesmerge together to form a single entity having combined organizational norms and culture.The survivor acquires all the assets as well as liabilities of the merged company orcompanies. Generally, the surviving company is the buyer, which retains its identity, andthe extinguished company is the seller.Merger is also defined as amalgamation. Merger is the fusion of two or more existingcompanies. All assets, liabilities and the stock of one company is transferred to TransfereeCompany in consideration of payment in the form of : ã Equity shares in the transferee company ã Debentures in the transferee company ã Cash ã A mix of the above modes Create PDF with GO2PDF for free, if you wish to remove this line, click here to buy Virtual PDF Printer  P a g e| 2 ACQUISITION Acquisition in general sense is acquiring the ownership in the property. In the context of business combinations, an acquisition is the purchase by one company of a controllinginterest in the share capital of another existing company. METHODSOF ACQUISITION Methods of Acquisition AgreementWithThePersonsHoldingMajorityInterest InTheCompanyManagement PurchaseOfSharesInOpenMarketPurchaseOfNewSharesByPrivateTreaty AcquisitionOfShareCapitalThroughTheFollowingFormsOfConsideration Create PDF with GO2PDF for free, if you wish to remove this line, click here to buy Virtual PDF Printer  P a g e| 3 ThePossibleReasonsfor AnAcquisition: TYPES OF MERGERS   Procurementof Supplies: 1. To safeguard the source of supplies of raw materials or intermediary product;2. To obtain economies of purchase in the form of discount, savings intransportation costs, overhead costs in buying department, etc.;3. To share the benefits of suppliers economies by standardizing the materials. RevampingProductionFacilities: 1. To achieve economies of scale by amalgamating production facilities throughmore intensive utilization of plant and resources;2. To obtain improved production technology and know-how from the offereecompany MarketExpansionandStrategy: 1. To eliminate competition and protect existing market;2. To obtain new product for diversification or substitution of existing products andto enhance the product range; to reduce advertising cost and improve publicimage of the offeree company; FinancialStrength: 1. To improve liquidity and have direct access to cash resource;2. To dispose of surplus and outdated assets for cash out of combined enterprise;3. To avail tax benefits and to improve EPS (Earning Per Share). GeneralGains: 1. To improve its own image and attract superior managerial talents to manage itsaffairs;2. To offer better satisfaction to consumers or users of the product. Create PDF with GO2PDF for free, if you wish to remove this line, click here to buy Virtual PDF Printer  P a g e| 4 TYPESOF MERGERS Merger or acquisition depends upon the purpose of the offeror company it wants toachieve. Based on the offerors’ objectives profile, combinations could be vertical,horizontal, circular and conglomeratic as precisely described below with reference to thepurpose in view of the offeror company. TypesOfMergersVertical Horizontal CircularConglomerate Create PDF with GO2PDF for free, if you wish to remove this line, click here to buy Virtual PDF Printer
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