My Firm’s Acquisition Essays

My Firm’s Acquisition Essays My Firm’s Acquisition Essay My Firm’s Acquisition Essay My Firm’s Acquisition Name: School: Course/Number: August 16, 2011 Instructor Name: My Firm’s Acquisition As the CEO of McCann Erickson, I am trying to acquire Ogilvy Mather advertising company, which is the same size with our company. With its acquisition, our firm is bound to become the biggest market leader in the advertising industry. Ogilvy Mather being a foreign international company in many countries around the world, we are sure to become the market leader through an acquisition in the whole world without competitors coming in close. Considering that both firms are ion the same industry, an acquisition would come in helpful in saving costs through economies of scale and a synergetic benefit as well as added expertise and diversity of services. However, considering that majority of acquisition and mergers do not go well and end up causing more problems than benefits, a close analysis will need to be conducted to come up with the best way to go about the acquisition. McCann Erickson is one of the biggest worldwide agencies that has specialized in traditional advertising and offers a wide range of marketing services through the McCann world group that coordinates several other companies such as Futurebrand and Weber. Our company has been in existence for around 8 decades and has had a vast experience in multinational services. The firm is based in the United States of America with its headquarters in New York City. The firm uses its local expertise together with its resources to build a reputation that makes it among the biggest agencies. Ogilvy on the other hand, is an international firm. Ogilvy Mather on the other hand, as mentioned earlier is an international company in the same industry in advertising, marketing and public relations. It was established around 948 in Britain as a simple service firm of few workers to become one of the leading advertising firms in the world today. The firm is currently based in Manhattan making it ideal for neg otiations of the acquisition since it is within United States. More so, the company has engaged in more diversified activities such as providing consulting services for clients and formulating strategies for its clients that they call cross-cultural marketing practice. Procedure Considering that most of the acquisitions fail, a procedure to ensure this does not happen will be required. Most of acquisitions fail due to the amount of acquiring the firm paid especially if it was too high and outdoes the benefit of the acquisitions. However, acquiring price is not the only problem causing failure of acquisition, but also other factors such as difference between the firm cultures and operation. In my acquisition of Ogilvy Mather, I would proceed using the following steps to ensure everything goes well to avoid failing in the future. The first strep would be establishing an acquisition team to undertake the acquisition procedures that will include all stakeholders (acquisition.gov, n.d.). The best thing to do is have a team to undertake the acquisition project that will contain professionals, as well as stakeholders to ensure they are aware and contribute to the process considering that know the profile of the firms well. This way, all the team members will focus on one goal of coming up with the best strategy. The team will be issued with specific duties per person and they will be empowered to carryout their roles effectively. In this team, the senior management from both firms would be involved since they are aware of the companies’ performances and the worth of the company. The second step would be describing any problem that may arise or needing to be solved. In this step the team should be focusing I on what the firms aim to solve or improve such as the problems with the firm to be acquired consideri ng that during acquisition the problem or issues are such as reducing costs, building expertise and solving the problems within the firm. The team should seek to define the desired outcomes from both firms at this stage, whether the acquisition can help meet the organizational goals, which in our case is becoming the biggest market leader and doubling our size of our firm. The third step would be examining the market sector, both private and public so that the team can know the possibilities or opportunities in the market place for the firm. This way, the team can be I a position to know what opportunities are available in the industry after the acquisition and whether the goals of the firm are achievable (acquisition.gov, n.d.). After this steps, the fourth step would be developing a performance-based acquisition that would involve conducting an analysis and formulating the objectives of the firm. Then an analysis of job would follow and then complete a performance statement for the company (acquisition.gov, n.d.). This way the team would have a draft of expected performance after the acquisition and implementation would be easier. The fifth step would be developing a way of measuring performance after developing the performance-based acquisition. This will come up with the strategy to follow in managing the performance of the firm after acquisition to achieve the desired and set out goals. This would involve selection of measure for judging the performance of the firm after acquisition to find out if there is any problem with the strategy used. The sixth step would be finding the right contractor for the work, one who will understand the performance-based acquisition set out by the team (acquisition.gov, n. d.). The contractor must know what the firm needs and possess the necessary requirements for executing the strategy. Collaborating with a good contractor will help solve some of the potential problems that arise after acquisition. The last step is putting the contractor as part of the acquisition team to work together. This last step involves allocating resources to the contractor and the team to execute the plan well that involves maintaining the team, restructuring the roles and assigning responsibilities for managing contract performance (acquisition.gov, n.d.). The contractor is supposed to ensure that all goes as planned by the team. Using these seven steps, the acquisition is bound to succeed and potential problems that cause failure will be dealt with easily after the acquisition is done. Institutional-based Issues Some of the institutional issues I am likely to encounter in the acquisition are the need to responding to constraints in the institutions and transitions after the acquisition. Most of companies at most times do not fit in most of the aspects, and such issues will arise, making a bit difficult to integrate easily (Peng, 2010). Such issues can be handled prior to acquisition to ensure that after acquisition, there will be no hard time integrating the systems of the companies together. The other issue is hard behavior ad norms that may be hard to kill to get a chance to acquire the firm such as hubristic managers and who may feel that their firm is worth more and may not feel they are better in some things and may want to remain in control (Peng, 2010). Resource-based Issues Resource –based issues are such as leveraging of the management capabilities of the two firms after acquisition that may be a little hard considering the size of the firms. Ogilvy Mather could be better in some certain management than we are while we could be better at other management places such as in traditional advertisement management. The other issue that could be encountered is integrating the resources such as cash and human resource to realize the best combination of roles and maximum productivity. More so, the integration of the intangible assets such as the reputation might be quite hard (Peng, 2010). Motives of my Acquisition The first managerial motive my acquisition is synergy that comes with combining of two firms. With acquisition of Ogilvy Mather, there will be a chance to build more power in the market since all resources used by the form will be used together with ours. This way, our weak points in terms of resources will be eliminated and some of the unused resources will be used for better purposes. In addition, this will increase our economies of scale and access to more resources. With economies of scale, there is a greater possibility of reducing costs especially from attained discounts. The other motive is growth of our firm to become the market leader as well as have the biggest market share. With acquisition, we are in a position to enter markets that we did not serve while at the same time we shall maintain the market of Ogilvy Mather. Another motive is to create value of shareholders’ wealth as well s increase the value of the stock. Innovation is the other motive that will be ea sily achieved through combined expertise of the firms after acquisition since each firm has its strong brands that will build a bigger band together (Peng, 2010). With acquisition of the Ogilvy Mather, we are in position to retain their market share and make a bigger firm after combining its resources. More so, with such an acquisition, McCann Erickson is bound to be the most powerful firm in the industry that will give us the chance to the advertising industry (Peng, 2010). However, the performance of the acquisition has to be considered first before such motives. In addition, my motive is to negotiate the most successful acquisition by ensuring that its performance is quite good. Our motives can be achieved with proper implementation of the acquisition and ensuring not to offer a bigger premium than benefits that we would get to ensure a successful acquisition. Hubris I do posses hubris considering that I am confident that my organization is the best suite to perform this acquisition and ensure success. The reason that makes me possess hubris is out of my vast experience in the industry, which has made be a better CEO. I learned that confidence boost my capabilities in executing my duties. More so, it makes me more aggressive in business that further aids my guts to take up risky situations that have brought me to my current position. However, I ensure that my hubris character does not ruin my firm and I ensure to involve others in making decisions. Ensuring Success of the Acquisition To ensure that the acquisition is going to be effective, during the performance based acquisition development, we shall consider several strategies. One of the strategies is speed at which we acquire and integrate the firm with our company. It is important to assimilate an acquisition swiftly to avoid losses and realize the synergetic benefit as early as possible to avoid having to incur costs due to unplanned acquisition. With the developed performance-based acquisition, it will be easier for our firm to integrate Ogilvy Mather into our strategy considering that comprehensive analysis abut the matching of the firms shall be done before the acquisition. This will include making quick decisions about the leadership of the firm, processing the necessary administration operations such as compensation, the business cards, and integrating the human resource to ensure harmony among the employees (cpstrat.com, 2011). The other strategy to ensure success of the acquisition is integrating sales to have one or combined sales team, marketing and service deliveries to ensure that everything id run smoothly and to enable tracking of performance. Considering that staff will play a big role in the success of the acquisition, there will be a staff rearrangement where the best will be retained and those that may not fit within the new working culture will be eliminated to ensure only productive ones are left. There will be a clear vision outlined that supports the new acquisitions and considers goals of the new entity formed after acquisition. The statement will be for all stakeholders to understand. Moreover, many acquisitions have failed to lack of better communication and joint management. Before our acquisition, we shall have a selected team of leadership to ensure the acquisition will not waste time on selection of top management after acquisition. The selected leadership team will be served with the responsibility of integrating the employees after the acquisition and ensure communication flows freely from top-down and down to top (cpstrat.com, 2011). Conclusion Acquisition of Ogilvy will not be easy, however, with careful planning the right team it is bound to succeed. With the strategy mentioned above, it is my intention to ensure that I dedicate my self to ensuring it goes as smoothly as possible so that our desired goals and objectives of doubling the size of our firm is achieved. Io intend to work with the management team of the Ogilvy Mather company to ensure that we come to a deal that will be of benefit to all of us including the shareholders who want to realize the best value of their investment. I call upon all the personnel that will be involved to cooperate and make sure the process runs smoothly and fast enough as it would be necessary. References cpstrat.com. (2011). Merger and Acquisition Success Strategies. Retrieved from cpstrat.com/merger-and-acquisition-success-strategies acquisition.gov. n.d. Seven steps to performance-based acquisition. Retrieved from https://www.acquisition.gov/comp/seven_steps/home.html Peng, M.W. (2010). Global Business. Hoboken, N.J: Cengage Learning.