Corporate math has always been confusing to the layman. After all 54% plus 46% has always equaled 100%. And that’s considered equal, right? Well if you’re a graduate of Harvard’s prestigious school of business, or Wharton’s School of Business it makes perfect sense. I mean how many of us would consider an equal partnership of robbing a bank of $100,000 where I get $54,000 and you only get $46,000? I mean that’s equal, right? Let’s consider what constitutes a merger:
A merger of equals is when two firms of about the same size come together to form a single new company. In a merger of equals, shareholders from both firms surrender their shares and receive securities issued by the new company.
A merger of equals is not the most accurate definition of a merger. Most merger activity, even friendly takeovers, sees one company acquire another. When one company is an acquirer, it is proper to call the transaction an acquisition. Because one company is the purchaser and the other is for sale, such a transaction cannot be viewed as a merger of equals.
For example, the creation of DaimlerChrysler saw both Daimler-Benz and Chrysler end individual operations. Because neither firm acquired the other and a new company was formed, this is considered a merger of equals.
The countless moving parts of a merger of equals create significant challenges to achieving a smooth transition. Communication that defines executive roles and sets the tone for the new organization should happen quickly. This can sometimes be difficult, with inevitable internal politics and pre-existing loyalties competing for position in the new corporate order.
To prevent a slowdown in productivity and synergy realization (if not an all-out deal collapse), leadership should prioritize fact over emotion. Compare parallel roles and departments. Take honest inventory of relative strengths and weaknesses of executives and teams. Decide who offers the best capabilities, and act swiftly or set up the new organization accordingly.
Maintaining employee morale and engagement is extremely important. Leaders must convey a purpose and vision that transcends and evolves the original two companies. A purpose-driven transformation, along with a strong financial business case, are the two things that can make the difference to a diverse group of stakeholders.
Combining two disparate cultures is a major challenge because culture matters. Leaders must redefine the company by focusing on cultural characteristics that align. Culture is one of the biggest factors that can doom a deal, and it’s hard to get right. Make sure to do a thorough cultural due diligence in the transaction process to ensure what looks good on paper also looks good in person.
These days, it is not uncommon to see different types of companies come together. For instance, a technology company might merge with an original equipment manufacturer, or a financial services company could integrate a small start-up into a larger, established platform. These are the kinds of mergers that could present significant cultural challenges. In these situations, leadership must assess the landscape and determine a direction will be most advantageous to the whole.
I think we can say this smells more like a take-over. William Brown will remain chairman & CEO for two years and Chris Kubasik will serve as vice-chairman during this time. Subsequently they will shift roles giving Kubasik plenty of time to transition from New York to Melbourne. Only time will tell the future of Camden. The only thing we know for sure is that we lost the Oscar program to our new equal family member & that Senate minority leader Chuck Shumer has already secured a future for Harris employee’s located in Rochester New York. The coincidence of an impending layoff soon to occur in Camden could not have occurred at a worse time and this is part & parcel of corporate math.