The evaluation and negotiation of a merger are a major business decision. Most successful mergers involve the some basic steps. Merger agreement will reflect the unique situation facing each cooperative.
The evaluation and negotiation of a merger are a major business decision. Most successful mergers involve the some basic steps. Merger agreement will reflect the unique situation facing each cooperative.
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The evaluation and negotiation of a merger are a major business decision. Most successful mergers involve the some basic steps. Merger agreement will reflect the unique situation facing each cooperative.
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online from Scribd
The evaluation and negotiation of a merger are a major business
decision. Each merger situation is different, but most successful mergers involve the some basic steps. 1.Informal discussion 2.Formation of a steering committee 3.Determining a calendar of events 4.Formal feasibility study 5.Negotiating the merger agreement 6.Membership approval 7.Implementation of the reorganization. Step 1-Informal Discussion
1. The first step of the process involves an informal discussion by
the board of directors. 2. The board should consider the history of the cooperative, the present status, and, above all, what the cooperative should do to survive, prosper, and meet members’ needs. 3. Some factors to consider at this stage include: • How well do the business activities match the cooperative’s core areas? • Do the trade areas fit together or side-by-side? • Is the merger partner a viable, on-going concern? • Does the potential for merger merit a formal study? 4. This stage of the merger process generally ends with the board’s passing a formal resolution to investigate a merger. Step 2-The Merger Steering Committee
When the informal study and discussion by the board are
favorable, the next step is to appoint a steering committee composed of board members from the two cooperatives. Step 3-The Calendar of Events The steering committee defines a calendar of events for the entire merger process and proceeds with each step.
The calendar of events might include:
Effective date for the merger Target date for approval Information meetings: membership, employees Announcements: letters to membership, notification of meetings Tour of facilities by steering committee Recommendation by steering committee Review of feasibility study Approval by board of directors at each cooperative Presentation and approval at joint board meeting Step 4-Formal Feasibility Study The most crucial step is the formal feasibility study. The study should consider the last two year’s financial information for each organization as well as a projected balance sheet and statement of operations for the combined operation. The study should also include historic and projected financial ratios for the separate firms and the combined organization including: • Current Ratio • Debt Equity ratio • Member Equity to Total Assets • Return on Assets • Expense Ratios Step 5-Negotiating the Agreement
• The actual merger agreement will reflect the unique situation
facing each potential set of merger partners. • Your cooperative’s attorney can assist you in codifying the actual contract terms. • Specifying the exact terms of a merger or acquisition brings up a number of difficult issues. • These include combining the equity retirement plans, combining the board of directors, deciding on a name for the merged cooperative, designing a program for unifying operations, and selecting a manager for the merged firm. Step 6-Member Approval Stage
• If the merger is approved by the board, the next step is to
present the issue to the membership. Communication is one of the keys to a successful merger. • Financial and feasibility information can be provided in condensed form. Informational mailings and/or informational meetings are often used at this point. Legal requirements concerning the notice of meetings and what constitutes a Quorum for a merger vote must be strictly observed. • The directors of both cooperatives should strongly urge approval by the membership through letters and personal appearances at informational meetings. It is important to keep employees informed. Step 7-Implementing the Reorganization
• If both memberships approve the merger, the formidable task of
implementing the merger or reorganization occurs. • The manager and directors should start managing the transition as soon as the deal is announced. • Communication is extremely important at this stage. Basic steps in strategic planning in Merger
• Assessment of changes in the organizational environment
• Evaluation of company capacities and limitations • Assessment of expectations of stakeholders • Analysis of company, competitors, industry, domestic economy and international economies • Formulation of the missions, goals and policies • Development of sensitivity to critical external environmental changes • Formulation of internal organizational performance measurements • Formulation of long range strategy programs • Formulation of mid-range programmes and short-run plans. • Organization, funding and other methods to implement all of the proceeding elements • Information flow and feedback system for continued repetition of all essential elements and for adjustment and changes at each stage • Review and evaluation of all the processes