mergers and acquisitions - an opportunity

Economic growth cycles often triggers need for re-alignment of industry in many segments. companies exploit opportunities within those re-alignments to strengthen their presence. mergers and acquisitions is a usual strategy. benefits like economic of scales, synergy, operating economies are cited. underlying intent will be growth and profitability always. it could be for consolidation of market segments or even for diversifying the risks with strength. The latter often with an ulterior motive to limit severity of competition by increasing market power. Because of these tendencies, primal it may be, the legal safe guards and governance systems are also largely around financials, market, and resource allocations and at times extending to shareholder rights. For these reasons, the primary law remained to be Companies Act 1956 for a long time. The recent Competition law of 2002, also aims to regulate such ulterior motives mentioned above. FEMA and SEBI's interventions are largely for shareholder rights and investor obligations from a governance perspective. The missing link continues to be on statutes governing HR of the affected companies. The limited scope for intervention provided under ID Act, 1947 has limitations once such a merger or acquisition gets the High Court's stamp of approval. The labour machineries within the ID Act will be forced to recognise and comply with High Court's order. In fact the Industry HR professionals have a greater role to play in such events where a dedicated third party advisor will be essential. HR strategies need to tailored for eg whether it is a vertical, horizontal or conglomerate merger or acquisition. on the other hand in case of an amalgamation, a more synergistic approach maybe needed. Similarly take overs, especially hostile, may need to face equally hostile employee sentiments direct as well as indirect. Conventional hr management exposure and experience becomes irrelevant or challenging for screening lay offs, consolidating functions/departments, weeding out peripheral product and service lines, integrating new talent, streamlining work schedules, defining meaning of 'employee welfare', or merging different payment cycles, shift schedules, integrating cultures, whether it is uniforms, canteen cuisine, children education policy or maternity leave and other absence practices, consolidating conflicting wage elements, or even in deciding which CEO to remain ultimately..!