Marriage

first_img Previous Article Next Article An HR prescence at an early stage in negotiations may be the key to more successful mergersSamuel Beckett’s famous axiom about his life’s purpose being to “fail, fail again, fail better” is one that is apparently dear to many chief executives’ hearts. They merge, acquire and deal like never before.Boardroom confidence in mergers and acquisitions has taken the value of such transactions to an estimated global value of $2,200bn. In the UK alone, the DTI informs us, UK companies were involved in acquisitions and mergers worth some £53.8bn worldwide in 1998. That’s up on the £19bn of 1997 and the £13.4bn of 1996. And yet in over 80 per cent of the deals sealed, firms fail to produce any increase in value for shareholders. But despite all the talk of commercial logic and synergies, they are normally a disaster. According to a new study from KPMG, 80 per cent of senior executives believe the deals they have done furnished benefits for shareholders.Yet, in fact, in 83 per cent of cases, the merger failed to yield any benefits at all. Worse, in more than half of the 700 deals looked at by KPMG between 1996 and 1998, the deal actually destroyed value. In many instances, those executives are in no position to know either way, as almost half of the organisations never even bothered to find out if the merger had benefited anyone. Forgotten people factorAnd the reason a deal is usually doomed for M&A failure, personnel professionals will by now have guessed, is the forgotten people factor. As Sue Cartwright and Cary Cooper argue in a new IPD book, HR Know-how in Mergers and Acquisitions, most M&A decisions are based solely on projected earnings and economies of scale. The people involved are a matter for operational management after the glorious deal is done. In one of the classic instances, Royal and SunAlliance had duplicate boards for over a year – a fine example of leading from the front.“Too often the human resource management aspects are forgotten when firms engage in M&A activity,” the authors say. “In many ways the process of merger is much like a marriage. Whether two organisational cultures are compatible is not a question often asked by boards and chief executives intent on finalising a deal.”And yet many in the personnel field have been arguing this for a very long time. Is anyone listening?John Nicholson, chairman of business psychologists Nicholson McBride, says that counter-rational attitudes towards mergers are analogous to the universal conviction that interviews are the best way to recruit people. In the face of all the evidence, everyone likes to believe they are splendidly intuitive selectors of people. “Just look at the people around the top table when mergers are done – chief executives, aided and abetted by bankers, stockbrokers and lawyers. They are focused on getting the deal, and that alone – not the things that will ensure success.Psychological sense “There is so much going on in a merger, everyone is so busy and so much is happening that actually making things work is inevitably put back. It is not rational, but it makes good psychological sense.”Merger situations are drenched in adrenaline, back-slapping and bonhomie and, all too often, HR specialists are likely to be the killjoys, calmly pointing out culture differences and technicalities. But yet the gradual accumulation of data does suggest their presence early in negotiations might genuinely be the key to more successful mergers. In one major study from 1989, AF Buono and JL Bowditch concluded that even when, on paper, acquisitions made good business, strategic, financial, economic and operational sense, they still had a 50:50 chance of failure. So few companies are good at the dull and gritty business of meshing organisations. Andy Booth, research director of business performance consultancy Managing the Service Business (MSB), says, “It is very easy to get carried away by the synergies. Mergers do affect people. They can find themselves working with their sworn enemy, so inevitably, culturally, it is a very difficult step to take.”As a result, M&As are the proteinaceous hunting grounds for the gannets in the executive search business. Many valuable staff are likely to leave in the process of a merger. According to Chris Long, a director at Norman Broadbent, the exodus tends to work in two phases. The first is driven by the merger itself with posts duplicated and a redundancy plan often clumsily instituted. But there is a second phase, 18-20 months down the line, when raised expectations are dashed and people are disappointed with the results. “For us,” he says, “mergers are vital to our business and, yes, the basic reason is that senior HR people are not involved early enough in the due diligence process. Cultural differences and process realignment are simply not taken seriously enough, and as a result they often go wrong.” Culture clashHowever, Dr Michael Greenspan, M&A veteran and partner at organisational development consultancy Kiddy and Partners, argues there is a tendency to reach for the ubiquitous “culture clash” when carrying out inquests into the failure of mergers. Instead, he says a more likely explanation for failure is poor planning and bad management.“Culture clash tends to be dragged up and blamed as an excuse for things going wrong, when really so many companies pay unrealistic prices for their acquisitions with some premiums as high as 44 per cent. “They should look more at the robustness of some of the strategic thinking. Success is not directly linked to the similarity of the companies. If it was, companies with similar HR systems would do better, but that is not the case.” Greenspan agrees that early involvement of HR people and operational managers – both of whom should be prepared to point out pitfalls to dollar-eyed CEOs – is paramount. But he also counsels the importance of planning the post-acquisition strategy in advance of the deal being concluded. Strategy should be ready to be unveiled the day the deal is signed. “All too often,” he says, ” the change is not managed. Uncertainty is inevitable, but the negative effects can be controlled. Tough decisions should be made quickly and then support should be available to help people adapt.” For those not wishing to plunge head-first into the turbulence of a full-blown merger, fashion is on your side. Strategic alliancesAndy Booth, research director of MSB, believes strategic alliances are starting to catch on – especially in the airline, automotive and IT sectors.Alliances offer many of the advantages, but hardly any of the risks, he says. “Companies would do well to be thinking about an alliance before a merger. They can get the benefits of size and the pooling of experience and assets, but without the risk of long-term damage. “If two organisations have swapped equity, it is a relatively permanent form of arrangement. If an alliance founders, it is less important.”Key motivators for alliances include cost savings and improved operational efficiency through joint purchasing, shared distribution networks, joint training programmes, shared marketing campaigns, and combined research and development initiatives.But Booth says there are cultural problems with alliances too – of culture clash and employee suspicion of acquisition by stealth.“Just like a merger, a poorly considered alliance structure can alienate employees. If one side is suspected of gaining too much power, a whole raft of people will feel overlooked and undervalued.” MarriageOn 30 May 2000 in Personnel Today Comments are closed. Related posts:No related photos.last_img read more

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TechnipFMC posts smaller third quarter profit

first_imgOil and gas services company TechnipFMC has recorded a smaller profit and revenues for the third quarter 2017 compared to the prior-year period but the company is optimistic about the recovery in the subsea market. TechnipFMC’s net income for the third quarter 2017 was $121 million, a 63% decrease when compared to net income of $327 million in the third quarter 2016, according to its financial report on Wednesday.The merger between between Technip and FMC Technologies was completed in January 2017 and it is worth mentioning that all prior year quarter comparisons are to pro forma results for 2016 as if the merger had been completed on January 1, 2016.Total company revenue of $4.1 billion was down 17.8 percent from the same quarter in the prior year and revenues of $5.03 billion.Looking at the company’s business segments, the Subsea segment brought $1.5 billion in revenues, Onshore/Offshore brought $2.3 billion, and Surface Technologies segment contributed $354 million.Subsea revenues were down 37 percent from the prior year, primarily due to a reduction in project activity within Europe and Africa.Onshore/Offshore revenues declined 3.8 percent from the prior-year quarter due to the completion of several projects since the prior-year period, partially offset by increased activity in the Middle East region.Surface Technologies revenues increased 19.9 percent from the prior year quarter as a result of the robust increase in North American well completion activity, while international markets remained stable across our products and services portfolio.Doug Pferdehirt, CEO of TechnipFMC, stated: “Total inbound orders for the quarter were $2.5 billion, with Subsea at nearly $1 billion – reinforcing our conviction in the steady recovery of the subsea market. We believe that most major subsea projects can move forward at today’s oil prices, with delays in project sanctioning more a function of near-term price uncertainty than project returns.”Pferdehirt also expects the company’s 2018 Subsea inbound to exceed 2017 levels, driven by the current momentum in project bid activity and an acceleration of integrated project awards.Pferdehirt concluded, “As we look to 2018, we are managing revenue declines against the strategic investments needed to sustain our operational capabilities through the recovery. We see significant opportunities ahead, and these will be driven by internal initiatives as well as market fundamentals.”Offshore Energy Today Stafflast_img read more

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Parma’s sentimental Serie A return saved despite sanctions

first_img Marek Suchar: “As esports betting grows, we will no longer speak about it as one sport” June 18, 2020 LiveScore adds new leagues to streaming offering August 12, 2020 LiveScore celebrates streaming service launch with Serie A partnership June 17, 2020 Share StumbleUpon Related Articles Submit Share After much speculation, Italian club Parma have been docked five points for next season, but will retain their status in Serie A for the coming campaign.The sanctions come after striker Emanuele Calaiò was found guilty of attempting to fix Parma’s final match of the Serie B season, against Spezia. Calaiò has subsequently been banned for two years and fined €20,000 (£17,800). The journeyman striker, who joined Parma from Spezia in 2016 was sent four suspicious whatsapp messages to his former Spezia team mates. Just four days prior to the match taking place, the 36 year old messaged Spezia defender Filippo De Col, stating: “Hey Pippein [De Col] you better not give me a hard time Friday my friend,” he then added: “Tell that too Claudiein [Terzi] too”, and “Especially with the relationship you have with me.”The 24 year old Spezia defender failed to respond to his former teammate, which prompted the following response from the Parma frontman: “However Pippein be calm I was joking anyways for me it’s the same after all I’ll retire in a bit.”Parma went onto defeat Spezia by two goal to nil, booking their place in the Italian top flight, after three successive promotions. Parma have maintained that they haven’t done anything wrong, emphasising that they plan to appeal against the decision. In a statement, the club commented:“We consider the condemnation of our employee Emanuele Calaiò to be abnormal in respect to the facts that led to his referral and the inquiry, and the very heavy penalty inflicted on our club for objective responsibility illogical and in contrast with recent sporting judgments.“We trust that the complete lack of connection of Parma to any unlawful behaviour will be recognised by the federal court of appeal, to which we will resort in a short matter of time, in the hope of finding justice.”last_img read more

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Rayo Vallecano – Real Madrid to be played on Monday after vandals sabotage floodlights

first_imgThe match was due to kick off at 21:30 CET, but the unexpected turn of events means that the pair will now go head to head a day later, with kick-off scheduled for 19:45 CET.Cristina Cifuentes, a delegate of the Government of Madrid, said an investigation will now begin to track down those who caused the damage.“A notary of faith will come and will open an investigation to see who is responsible. Both teams wanted to play but the delegate has determined that it was not possible with the light as it is,” she stated.Earlier on Vallecas president Martin Presa told Canal+ that he feared sabotage was the cause of the lighting failure.“We have suffered a sabotage. Someone has cut the cables from the tribune,” he said.“The solution is to reconnect the cables and expect electricity to give the spotlight. The wires were cut off and that’s not normal.”last_img read more

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