Opportunities:
Despite the adverse relationship between the executives of Beauchamp and Synergon, there might be a room available for the resolving the issues. The fact that the acquisition of Beauchamp by Synergon, is ultimately beneficial for both the companies. So, they will make the relations better in the future. Furthermore, both the companies will have to amend their culture,in order to make the acquisition successful and profitable. The poor relationships between both companies can have an adverse impact on the ability, to achieve post-acquisition benefits for both Synergon and Beauchamp. The ultimate purpose of the acquisition for Synergon, is to operate directly in the U.K. market.So it could take benefit from the wealthy customer base of Beauchamp, and to take benefit from the expertise of the Beauchamp i.e. their managing director Mr. Julian.
On the other hand, Beauchamp aims to take considerable benefits, from the technical expertise of Synergon.As the areas in which Beauchamp lacks, Synergon hasconsiderable competencies in that particular area. It can be said that, poor communication and terms between the senior management of both the companies, will not allow them to take advantage from the acquisition. Due, to the extreme harsh relations, it is highly likely that Mr. Julian will leave the combined company.Which might place alimit on the ability of Synergon, to gain advantages from the purchase of Beauchamp.
By implementing several changes in the operating style and culture of both the parties the issues can be resolved, which are necessary in order to make the acquisition feasible. The culture of Synergon is to maintain close monitoring on the middle management of the subsidiaries.Also, the reward package is verylow. It is recommended that, the reward system should have to be adjusted adequately that it could motivate enough the employees of Beauchamp, to contribute to the success of both the subsidiary and parent company.
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On the other hand, the management of Beauchamp, also has to show some flexibility in fulfilling the requirements of the potential acquirer. The fact that the management of Synergon requires significant and complex information, which may be very critical and essential for the parent company.Without this information, the planning about the management of the target company is not possible. Furthermore, the conflicts can also be resolved, if the management of Synergon gives sufficient time to the management of Beauchamp for reporting.Which will not impair the quality of their work.
In addition to the above factors, the conflicts can also be resolved.By providing guidance to the auditors and middle management of the Synergon, on how to communicate with the management of Beauchamp. As the terms will deteriorate substantially, due to the inappropriate way of communication of the auditors with the secretary of Mr. Julian.This slang way of talking toauditors undermines the reputation of the profession and parent company.This also damages the relation of both parties. Furthermore, the employees of both companies, will have to receive substantial training, regarding the culture of both the companies.So that, the employees will be aligned to the policies of the group and subsidiary. Many mergers and acquisitions transactions fail, just because of the clashes between the cultures of different organizations. The terms and affairs between Beauchamp and Synergon can be improved, due to this cultural compatibility.
Practical Evidence:
Nowadays many companies are considering to acquire other companies, within and outside the sector in which they are operating. The rapid increase in the mergers and acquisitions transactions, is resulting in the increased rate of failure of those transactions. There can be many reasons for this increase in the rate of mergers and acquisitions failure, which mainly include the absence of proper due diligence process beforeacquisitions, lack of communication between the associated companies, management and cultural clashes between the organizations. These are the factors which are also making the acquisition of Beauchamp unattractive for Synergon.
The merger of BenQ and Siemens:
The merger of BenQ with Siemens, is one of the greatest failures of mergers and acquisitions that had arisen, due to lack of communication between upper and lower management. The senior executives of both the company plans to vary the range of products offering drastically, without communicating to the lower management of the group. The implementation of this strategy proved to be disastrous for both the companies, and resulted in the total loss 800 million euros. Apart from the financial losses, there were many operational losses.The morale and confidence of the employees had lost, which increases the employee turnover ratio at an extreme rate. If the proper plans are communicated with the employees, the situation might be very different. It is because they were mentally preparing for the change,before the implementation of change.(Ewing, 2007)
Pepsi Co and Kentucky Fried Chicken:
Key employee retention is also very important for the success of the mergers and acquisition transactions, and the business history is full of those examples. In the late 1980s, Pepsi Co acquired all the holding rights of Kentucky Fried Chicken (KFC).As a result of the acquisition majority of the senior management was concerned regarding the future of their jobs, due to the significant pressure and interference of the Pepsi’s management into the operations of KFC. The majority of the senior management of KFC have left their jobs, due to the strict policies of the KFC.Whereas, the remaining concerned employees cannot maintain the level of efficiencies of their service, which results in the significant operational losses and quality of the products offered by KFC. Synergon Capital might face this kind of problems, if the conflicts are not solved between the management of Synergon.(Impraise)
Daimler and Chrysler merger:
The merger between Daimler (manufacturer of Mercedes-Benz) and Chrysler can be considered as a relatively easy and straightforward process, because both the companies operate in the same market, also the business risks of the companies are almost same. However, the organizational structure and culture,are very different between both organizations. Daimler is risk averse, and Chrysler is arisk taker, who just wants to maximize returns. After the merger, the German culture was implemented in both Chrysler, which results in the decline in the performance of Chrysler. Same problems have arisen in the case of Beauchamp and Synergon, due to the differences in the culture of both the organizations.(Olson, 2007)
Bibliography
Ewing, J. (2007). Siemens' Culture Clash. Bloomberg.
Impraise. (n.d.). The Challenges With Mergers & Acquisitions. Impraise.
Olson, P. (2007). Chrysler Goes The American Way. www.forbes.com.
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