Free Firm’s Acquisition Essay Sample
A firm refers to any business that may be in the form of an enterprise run by an individual, corporation or partnership. As the chief executive officer of an accounting firm that offers auditing and accounting services for some payment, I have plans of acquiring a consulting foreign firm whose function will be to offer professional advice to the organization. The size of the firm is, therefore, anticipated doubling and turns to be the biggest in the industry with the services of accounting and consultation. The two firms are located in the United States and the South Africa. Since the businesses are situated in two continents, there is the advantage of making many profits.
How Would you Proceed with the New Firm?
The expected growth brings many benefits, as the chief executive officer of the two firms I have enthusiasm with the idea of becoming the captain of a big merged with ultra-much influence in its operations. Additionally there is much anticipation that salaries, bonuses and stocks option doubling next year due to the size of the new firm. However, success of the merged firm will be a critical issue, since seventy percent (70%) mergers and acquisitions reportedly fail to proceed with the new image of the business firm.
It is, therefore, crucial to get abreast with the reasons underlying the frequent failure of Mergers and Acquisitions. One factor that leads to failing company integrations is ignorance, where the parties to a merger or acquisition fail to share commercially sensitive information preceding to coming under a single ownership. Instead of focusing on keeping an integration team busy for a long time before the first day, most chief executive officers waste time awaiting clearance from the authorities regulating mergers and acquisitions. As the captain of the new firm, I will focus on getting that crucial business information about the consulting foreign firm, so that to have a hint on how to run it.
Lack of a common vision is another reason for failing M&As. Without a clear statement, on what the company will advocate for, and what will change as compared to how things are different today, there is no chance that the organizations will ever unify (Krug2009). It is upon me then to convene conferences with employees and hire services of experts who will advise on setting a common vision and achieving the set goals. Delayed team resourcing is also another reason behind the seventy percent of failing Mergers and acquisitions. As the captain of the new company, I will dedicate the least time possible towards the release of the best players from daily businesses to join our integrated team.
Poor governance has also led to unsuccessful M&As in the past. Improper governance entails the lack of clarity on who decides what, and lack of a clear issue resolution process. Integrated firms bring up several issues that call for fast resolution without which everything comes to a standstill. To respond to this problem, I will advocate for delegation of authority and liaise with other managers in the organization to develop a sound-decision making process.
Vague program management has also been an obstacle towards the thriving of mergers and acquisitions (Krug 2009). Lack of a proper, detailed implementation plans and failing to crucial interdependencies between considerable work streams brings many projects to a stop. Secondly, it may demand an expensive rework or make the integration timeline longer, which may disappoint. It will be my duty to ensure that all decisions are implemented through the frequent monitoring around the organization. Finally, lack of courage is an impediment to the success of integrated institutions. Lack of courage delays the making of some fundamental and tough decisions in the survival of an integrated organization.
The making of these decisions may irritate some people, but it has the privilege of transparency coupled with honesty. These advantages compel those who do not find the situation bearable to withdraw, making the merger gather too much speed. To deal with fear in making decisions, as a captain, I have resolved to remain selfless, and put the success of the acquisition before everything. This will assist in championing accountability and transparency in the organization, and therefore, the production of desired results. With the aforementioned measures and strategies, I am convinced that the new integrated firm under my leadership will not fail.
What Institution Based Issues Would you Encounter?
Internal consultants may fail to bring aboard the best practices that are found in other corporations. This may make recruitment of experience into the group necessary or provision of diverse training to internal consultants. Secondly, it might be exceedingly difficult to assess the real expenses and gains of an internal consulting group (Krug 2009). The difficulty encountered in measuring the costs and benefits of an internal consulting firm may put the ability of auditors and accountants within the firm into question. This tension may lead to disagreements or poor work relations in the integrated organization.
The institution aims at improving the service delivery. This is possible through registering our professionals (auditors, accountants and consultants), so that they may stand a better chance of delivering their experience on the international fronts. The company also aims at making publications that will be distributed to areas, where the company has not opened up branches. This will put the organization in a better chance of spreading its ideologies over a wide geographical area.
What Resource Based Issues would you Face?
Prior to procurement, usually an audit of all the assets of an organization is conducted. The purpose of the audit is to evaluate the worth of the company and payments to be made for it. The audit explores employee population and the importance of those employees to the organization. This process is known as pre-acquisition screening. Considering the case of integration between the accounting and consultation firms, it is evident that the number of managers needed to be lessened and duties delegated accordingly. This will assist in preventing the tendency to duplicate roles (Darby 2006).
To ensure the success of the company, it is noteworthy to pay keen interest to customer’s welfare, since they are the nerve stakeholders of the company. It is difficult to meet customer’s needs without having an understanding of the varied cultures of customers and clients. Understanding customer cultures becomes a hurdle, since there are lean resources to conduct the exercise that is particularly useful for making sound managerial decisions. Another resource-based issue is gaining access to the capital necessary for growing or expanding the business. These problems have been addressed and strategies of dealing with them devised. We are collaborating with financial institutions that will assist in advancing the company with loans, which will help in meeting the set objectives.
Human resource is another tricky issue, as far as the resources are concerned. The management has resolved to effect retrenchment of almost twenty percent of the enormous human resources. The tough decision has not enjoyed warm reception from the affected individuals and bodies, responsible for safeguarding workers welfare. Trade unions have opposed the decision strongly, but the management cannot heed to it, and pave the way for shocking outcomes on the future of the organization. The decision to lay off some employees has also stirred fear in the other parties, who lack assurance of job security; this might affect their performance, albeit for a short period.
What Are Your Managerial Motives?
The management’s main goal is to ensure the survival and stability of the company in the new market region, before embarking on the long term goals. It is the aim and dream of all stakeholders in the company that the organization transforms to become the most competitive market leader. The company aims at offering advice to small businesses, like sole proprietorships among others. The proceeds from the consultation will help the company to make some money that will add to loans and help in realizing the objectives of the business. A look at the two countries, where the businesses are situated, reveals that they are not the same in economic development. Therefore, it could not be advisable to use similar managerial structures (Darby 2006).
The company intends to use executive, regional managers in South Africa, a way of exploring new business opportunities for the company in the African continent. In the United States, the company intends to use executive state managers. The managers will be advising on measures to be put in place in consideration to changes in the market. As the CEO, I believe that motivation is crucial for better performance; I have therefore resolved to reward all employees who exude exceptional performance when executing their duties. There is also a room for managers of lower ranks to make decisions. This is a way of ensuring that time is not wasted like in centralized management systems.
Do you Possess Hubris?
Hubris implies pride and too much confidence in an individual who lacks humility. As the chief executive officer, I have confidence in myself, but not to the degree of hubris. Managerial hubris has been the undoing of most business executives. Manager possessing hubris does not consult colleagues, and therefore, ends up making mistakes in their investment decisions. Personally, I get into a business venture after considering recommendations from a team of mangers that I send out on finding facts about the market. Secondly, my investment decisions are based on professionalism and practicability studies. The current decision to integrate the two firms was based on market change, where many people are getting into business without the knowledge of doing business. These individuals will need consultation and the services of auditors.
How Would you Ensure Success of your Acquisition?
The issue of mergers and acquisitions is tricky, hence, the need to approach it with deep thought and sobriety. Our goal as a team would be to embark on building the capacity of the giant sized firm, and hence, eventual retention of employees. It is our objective to remain the custodians of the competencies of the two merged companies. We also aim at employing and retaining leaders and managers with reputable interpersonal skills. With the aforementioned measures, I am certain of a vibrant and successful acquisition. Concisely, the human aspect has been the cause for the failing of most acquisitions. Therefore, I will pay much attention to the human factor, because the survival of an acquisition or a merger is dependent on the human factor (Buono & Bowditch, 2003).