Positive and Negative Points of Acquisition - Essay Example

Follow the dream Mergers and acquisitions are mostly about company’s growth. Whether it wants to increase its sales or acquire new s, it searches for the new ways to achieve their targets through merging with other companies, small and big. However, it usually brings certain risks and challenges in realizing the intended benefits of such activity. The changes in operating style, communication, production and service strategies and stakeholders’ expectations may be essential and influence the overall company activity (Raquib, Pauzi Bin Musif and Mohamed 2003). These changes may be for good and for bad. The article “Free to innovate” by Christine Canabou illustrates how one company, the Fallon, experienced substantial changes in its life after being purchased by the global advertising giant Publicis Group SA. Notwithstanding its chairman fears for the employees to be left their “home” because it was sold out, the company made all possible to prove that its soul was not going to change. And the company showed that by creating a manifesto that called for breakthrough ideas, such as “to unlock the entrepreneurial hostages within the agency”. New ideas were transformed into a full-blown company initiative- a “Dream Catchers” that gave employees license to be a little selfish and make their dreams come true sooner. One year after the initiative was launched, hundred staffers achieved their dreams (visited museums, ran with bulls etc.). The acquisition was as a strategic move the target of which was to help to achieve ambitious goals that the company could not probably achieve on its own. Today Fallon is a full-service advertising agency with the headquarter in Minneapolis with numerous awards and open marketing boundaries, intranet with the same companys quirky humor, full-fledged division of interactive consulting group and redesigned flagship office that brought a new way of working and grouping people. The article shows the overall positive picture of the acquisition and does not show any pitfalls that usually happen within the organization. The acquisition is about a change and it is obvious that the Fallon agency had certain changes in the top team. New arrivals and changes in the administrative efficiencies could not stay unnoticed by the staffers. While top teams work closely on key areas in order to improve them, the other areas may be left inactive. While acquisition offers the possibility for entering new markets and expand the company with its portfolio, some cultural issues may cause problems that are hard to overcome (Cameron, Green 2004). Another important point for consideration is the clients’ choice. They appreciate the small companies’ style of work, however, value the global names. As for the employees, especially when talking about the creative minds, they are better contributors to the small- sized companies. However, it is not always possible to survive the rivalry and get necessary resources without the patron of the big company. Positive and negative points of acquisition As it was mentioned in the article, the acquisition of Fallon brought changes into the company, such as division of interactive consulting group and redesigned flagship office. Reorganization and structure are always complicated issues for acquiring companies. If there are serious changes in the organizational structure of the company that is acquired, it may increase productivity or, on the contrary, bring much difficulty as individuals prefer to keep working as they were. Besides, some employees may not share the top team enthusiasm for the deal. That is why, there is a need in talking about the company visions and its schedule for sorting the structure. Managers are advised to encourage employees to read emails and come to the communication meetings. Since people become sensitive to every announcement within the company because of the acquisition, it is important to avoid the badly delivered news. When implementing an acquisition, there appear cultural incompatibility issues, as European and the U.S. styles of management are conducted in a different way. For instance, the U.S. companies are more aggressive in cutting of costs. Europeans take more time on reviewing. Rewards and degree of centralization are also different. As for the cultural integration, the best is to organize work and problem solving together and thus to achieve results that were not attained before the acquisition (Cameron, Green 2004). It is stated, that failures after acquisition come because of the people problems mostly. They can be costly for both employees and employers. Among the negative consequences of the acquisition are the layoffs. They created problems for those who lost their job and also for those who survived the cuts. Furthermore, these changes affect the company, as employees experience distress, some even search for another job and thus productivity of the company decrease (Braff, n.d.). For the business to maintain its stability, it is essential to retain the key employees that are critical to company success. For this reason, the company should identify such positions and offer such employees substantial performance incentives and bonuses. In order to create good background and build strong teams within the company after acquisition, management should be involved in company matters, thus to show they are capable of dealing with change. For employees, it is important to know that new management thinks about them that is why getting to know people would be extremely important for the new leaders. Positive attitude will also create an atmosphere of sincerity among the employees and new management. Huge companies such as Google, find it acquiring startups or smaller firms better way for development and expansion of their services instead of hiring new recruits. Beginning from 2001, the Google Company has acquired many other smaller companies, foremost venture capital-funded firms. In 2004, it acquired Keyhole, Inc a start-up company that developed an Earth Viewer product, a three-dimensional view of the Earth. After the acquisition, Google renamed the service to Google Earth. It gave the company users new powerful search tools that enabled users to view 3-D images of any location on earth (Google Acquires Keyhole 2004). By the integration into Google, users of Keyhole will benefit from the resources that the new company may offer to them. They say, that the end justifies the means. That is completely true when talking about the development of a certain business. It is impossible to be the top without offering the customers new products and services. Moreover, to survive in the modern world, one should gather all powers and talents in order to be a leader on a certain industry. This is why acquisitions and mergers exist. They allow the existing business to expand their capabilities and the companies that are merged to improve themselves. Such process is hard to organize and involve many parties. That is why, even the best intentions may cost someone working place, certain style of life and attributes one got used to. When properly managed, the acquisition may become the new wave in the company development, where employees and employers will benefit from the common goal. References Braff, D. n.d. After the Acquisition, Available from http://www.thebraffgroup.com/Articles/articlespdfs/After_Acquisition.pdf. [27 August 2014]. Cameron, E., & Green, M. 2004. Making sense of change management a complete guide to the models, tools & techniques of organizational change. London: Kogan Page. Canabou, C., 2001.  Free to innovate. Available from: http://www.fastcompany.com/44083/free-innovate. [27 August 2014]. Google Acquires Keyhole, The Wall Street Journal, October, 27, 2004. Available from http://online.wsj.com/news/articles/SB109888284313557107. [27 August 2014]. Raquib A., Md. Pauzi Bin Musif, Bin Mohamed M. 2003. Strategic Issues Relating to Corporate Mergers and Acquisitions for Small and Medium Companies -- A Thoughtful Analysis from the Viewpoint of Challenges of Changes, Asia Pacific Management Review 8(1), 99-112, Available from http://apmr.management.ncku.edu.tw/comm/updown/DW0810151620.pdf. [27 August 2014]. Read More