Performance and control problems in crisis management of mergers and acquisitions

With the increase in the no. of Mergers and Acquisitions with each passing day, the problems that may crop up are also aggravating. Need of the hour is to frame the strategies in such a manner that allows tackling of the situations no matter how adverse they are to the participating teams.

In this scenario, managing of the crises that may materialize have to be handled with all the might to make sure that the deal goes the way it is supposed to go. This is necessary because loads of efforts in terms of money and time go into it so no stone should be left unturned to make it a success. This calls for finding ways to achieve the desired goals. Formulating appropriate KPIs is one of the ways.

KPIs can be formed in different directions like Financial in which parameters such as no. of independent sources of funds, percentage share exchanged, operational savings and tax savings can be used to have an idea of the financial position for the merged entity. Human resource issues can be evaluated via cross cultural training, clearly defined goals and percentage job loss. Operations may be known through product continuation, product restructuring, percentage increase in market share and no. of assembly lines joined or functions merged. Last is the assessment of Compatibility with partner. This can be done in terms of goals compatibility, proposed time duration and no. of compliances required.

Most of the issues that crop up in amalgamation and Take-Over projects exist because of the communication gap that is there between the employees of the participating organizations. Incomplete and unclear information is the root cause of almost all the problems. This can be overcome by using effective channels of communication to impart complete and correct information. Funding is the next source of crisis in such activities.

Funding for the mammoth sized projects of Mergers and Acquisitions is of major concern to the participants. Exploring the avenues for drawing funds and zeroing on to the most suitable one requires an in-depth analysis of all the possible options and finding the one that is aligned maximally in accordance with the objectives already framed. Various sources for funds are available for both domestic and cross-border Mergers and Acquisitions. These include Share capital, Debt Raising, Retained earnings (for Internal Financing), ADRs (American Depository Receipt), GDRs (Global Depository Receipt) and Financial Institutions etc. (for external Financing). Arriving at an agreeable share exchange ratio is yet another subject, issues can stem from. Out of the many ways that can possibly be used to calculate this value, settling for the one that is convincing to all the parties is a difficult task.

KPIs help in discovering the problem areas and doing the subsequent handling needed. By assigning values to the parameters structured after a detailed study of the topic under consideration, the management can devise tools and ways to plug the holes which were initially creating difficulties. This is done after comparing the values obtained with the standard ones to know the deviations and diluting them to the maximum extent possible. KPIs organized on a balanced scorecard can be used for evaluating the progress of an organization or an event, in this case a crisis situation.

To conclude, KPIs are the specific, measurable and actionable measures used to attain an anatomical view of the entity in question to assess it. This enables the discovery of the aching areas. Further steps can then be implemented to bring the things back on track. A specific set for each case may be formulated. For Mergers and Acquisitions, these may be employed to know the reasons for failure of attaining the objectives and taking corrective action.