CHENNAI: As much as 40 per cent of all business mergers and acquisitions end up failures due to the importance granted to technological integration instead of seamless assimilation of human resources, according to Vinod Surana of Surana & Surana International Attorneys.
He was speaking at a National seminar on Mergers and Acquisitions (M&A), organised by the Department of Commerce at the MOP Vaishnav College for Women as part of its celebrations to mark a decade of autonomous status.
Surana, who was addressing students during a technical session, said that lessons ought to be learnt from big name mergers that had failed. Citing the failed attempt of Chrysler-Benz, he said it was a prime example of clash of cultures. “Benz thought it would gain entry into the American market. But, the working culture of both giants varied greatly,” he said.
On the contrary, Renault-Nissan have successfully partnered for over 16 years because neither wanted to combine to form a single identity, as unlike Chrysler-Benz. “It is important to understand Merger and Acquisition is a lot similar to Marriage and Afterwards. Renault and Nissan were very clear on the fact that only shared interests and goals had brought them together but they were separate entities with separate identities,” he added.
Identifying the market and developing the acquired product is also necessary for an M&A to be successful. An example is that of Tata Motors acquiring Jaguar from Ford. “Ford failed with Jaguar because they only wanted the brand name to sell their cars. Tata Motors instead pooled in money for a few years after the acquisition and nurturing Jaguar’s dormant brand identity. The result is that what Tata bought for £1.7 billion is now worth over £15 billion,” he said. David Jawahar, Registrar of University of Madras, who was the chief guest at the valedictory function, also acknowledged that a mismanagement of human resources was the reason behind failure of most mergers in recent times.