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Preparation and Evaluation Before Mergers

Evaluation includes: -

• Market Evaluation - Company's market, aggregate demand, growth rates, principal competitors, market shares, factors impending upon demand, prospects, technology review, latest trends, and other related areas.

• Operational Evaluation - Production process, bottlenecks, cash flow, raw material availability, input output ratios, other productivity measures, maintenance schedules and tooling requirements.

• Financial Evaluations - Projections, accounting policies, tax liabilities of the company and relevant individuals, other liabilities, statutory requirements and repayment obligations.

Partnering Criteria: -

• Select an Equity partner on strength of character, integrity and philosophy.

• How will they behave in the long run?

• People should be able to jointly solve problems instead of finding someone else to blame.

Steps for Mergers to Succeed

• Substantial effort during the integration process.

• Plan for integration before doing the deal.

• Work the details.

• Develop a clear communication plan throughout the entire process.

Results of Various Types of Integrations

• Laisser-faire mode loses synergic opportunities & pacifies acquired employees.

• The hard control mode sacrifices the competence of the weaker firm.

• The equality driven alternative may waste valuable competence of the better firm.

The best integration mode is achieved through complementary competence and is superior alternative mode.

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* Contributed by -
Gulbahar Grover,
PGDIM - 11,
NITIE, Mumbai.