Challenges of Mergers and Acquisition Strategy Between UAP Holdings and Old Mutual PLC

Abstract

Due to unpredictable environment in which organizations are operating in, organizations use different strategies to cope with the competition in the market. Mergers and acquisitions is one of such strategy used for accelerating growth and entry into new markets as well as achieving synergies, to become more competitive in the marketplace. Due to the dynamic modern day business environment, mergers and acquisitions have become a common phenomenon among various corporations. While a number of firms deliberate on mergers and acquisitions (M&A’s) as growth opportunities, they are also able to offer a feasible solution for firms seeking to downsize or firms which are seeking a successful exit strategy. The current study aimed to establish the challenges of merger and acquisition strategy between UAP holdings and Old Mutual PLC. The study employed a case study method to investigate the in the adoption of merger and acquisition strategy between UAP Holdings and Old Mutual PLC. The study used primary data which was collected using interview guide. Respondents for the study were senior leadership team including the managing director, the chief information officer, the chief risk and compliance office, the human resource manager, and a strategy executive. The data collected was analyzed by use of content analysis. The interpretation of data collected for the study were done and presented thematically. The study found that the desire to accelerate growth of market share; to achieve economies of scope; increase revenues; to achieve operational efficiencies and to achieve geographical and product diversification were some of the motives behind merger and acquisition. The study will be useful to managers in organizations undertaking mergers and acquisition strategy by giving them insights into challenges which pose risks to the success of the process. The study will also give insights to policy makers to allow them to draft policies that protect the interest of government and shareholders. The study adds to the body ok knowledge about mergers and acquisition strategy and will be useful to scholars with an interest in the challenges of mergers and acquisitions. The study concludes that there were some of the notable challenges experienced in merger and acquisition such as legal framework, high staff turnover, cultural differences and brand dilution. The study gave the following recommendations: organizations undergoing mergers should ensure to find a way to incorporate the existing personnel without having to lay off many employees. Another recommendation is to ensure that the systems are integrated as soon as possible so as to reap the synergies arising from a merger. Further research can be done in future using a different methodology such as regression analysis showing cause and effect in the same context but after several years to find out how the merger is doing and whether time factor has contributed to changes in findings. A similar study can be carried out to investigate the effect of mergers and acquisition on performance using a similar methodology but in a different context and in a different industry.