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Copy of MERGER AND ACQUISITION

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Evan De Vere Hunt

on 10 March 2014

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Transcript of Copy of MERGER AND ACQUISITION

EVAN DE VERE HUNT, AMAURY BASSE, LOUBNA ANOUATE, VICTORIA KEINER, THOMAS LEMOINE, LOUIS MARCEL
The Change Kaleidoscope
IMPROVE MARKET SHARE
Reach new markets and grow revenues and earnings
Expand marketing mix
ECONOMICS OF SCALE & SCOPE
DEFENSIVE STRATEGY
An industry where size matters and takeovers are common place
Objectives of the Merger
SOLVAY'S ACQUISITION OF RHODIA
The Change Design
SOLVAY
RHODIA
Change Path
Change Start-point
Change Style
Change Targets
Change Levers
Change Roles
TOP-DOWN
Participative
The acquisition TOP-DOWN
Despite being a top-down approach. Employees had a lot of input into the how the change was initiated.
Targets for accounts in arrears changed as well as days outstanding.

POCKETS OF GOOD PRACTICE
Outputs
Behaviors
Attitudes
These targets had an effect on how the accounts department interacted with customers

This in turn lead to an eventual change in employee attitudes.

No crisis
Wide Scope
Extension
Rhodia has a
more paternalistic
approach
Experience; M&A common place in this industry
Time, Cash
and People
Mgmt buy-
in
Mgmt buy-in
Power
Time
Scope
Preservation
Diversity
Capability
Capacity
Readiness
Chemical Company

€14.4billion revenue (2011)

Created 1863

Belgian
The Cash Management Department
"The sooner the better"
(Francois Rublon)
Deep and Wide scope; effected all staff
Different Cash Culture
Different ways of doing things.
Experience; M&A common place in this industry.
Ample cash, time
and people.
Lack of commitment from employees because of possible disruptions to routines

Problem of merger performing
departments of similar size
Power
Time
Scope
Preservation
Diversity
Capability
Capacity
Readiness
The Cash Management department
Kaleidoscope

Technical
IT processes merged
New data analysis system

Political
HR reorganization; most of the employees of the departments were promoted fired or moved elsewhere

Cultural
New head of the department came from Rhodia
Half of the employees were from Rhodia half were from Solvey
Change action teams (combining the best of both).

The manager of Rhodia was chosen to lead the department
Tools required by entire org; change needed to be fast
Wide Scope
Extension
Rhodia has a
more paternalistic
approach
Experience; M&A common place in this industry
Time, Cash
and People
Mgmt buy-
in
Mgmt buy-in
Power
Time
Scope
Preservation
Diversity
Capability
Capacity
Readiness
The merger achieved it's goals 1 year ahead of schedule
The impact was felt throughout the department
with some people's roles being changed and others leaving the department.
The differences in Cash Management gave the new team more freedom

They merged databases

They stopped dealing with certain unprofitable
clients
Both teams were more homogeneous than
originally thought
Individuals were experienced
Organisation; long but successful
People; same field of expertise
Some people were relocated and some operations were moved to Portugal.
Cash & Time; They had enough of both
Good communication from Mgmt improved awareness.
Commitment; the mixed managerial team improved the commitment of the staff.
The top-down approach minimized the power of the department managers but participative style gave them a lot of autonomy
Commitment; the mixed managerial team improved the commitment of the staff
Improved purchasing power, greater bargaining power.
Synergies amongst support units
2012 worldwide revenues of €3,127 billion.

For Years E.U had been the biggest player in the industry followed by America.

However Asia's revenue's surpassed both that of each continent in 2012.

Capital intensive industry (8 largest investing countries spent 200billion in 2012).

Increased competition and high capital needs has lead to an increasing amount of mergers and acquisitions in the industry


The Chemical Industry
Chemical Company

€5.9billion revenue (2011)

Created 1998

French

'Affaires Rhodia'
Introduction
The ideal department for synergy?

A support function managing cash-inflows

Concerned with Cash analysis and Cash collection

Both Solvay and Rhodia had Cash MGMT department with identical functions

Logically this presented a great opportunity to create synergies and reduce costs.
Maybe not.....

These were two previously autonomous units

Located in different countries.

With different approaches to cash management.

With separate data systems.

And Corporate management has promised not to fire any employees
Realignment
Transformation
Incremental
Big Bang
Reconstruction
Adaptation
Evolution
Revolution
Scope
Globally all the primary functions of each company remained separate

In the Cash MGMT Dep the function had to make many changes in to the way it conducted its business
How did the context differ between the global context and the Cash Management Department?
Preservation
Globally the acquisition was made to increase the scale of the company in the face of increased international competition

In the Cash MGMT Dep different cash cultures meant that they had to change the relationship with their customers.
3 major changes

HR and Culture
IT Systems and data analysis process
Technical processes
Full transcript