Reflection on cross-border M & A

Cross border M&A have a strong impact over the business and international strategies leading to the establishment of long term business. The mergers are gaining access to attain market and customer attention to follow the global trends. The M&A weigh certain risks and rewards in terms of investments. The current entry of China in the global market has impacted the international regime as China has become one of the significant players in M&A. This cross border merger initiated a new dimension that impacts the objectives of the states. The cross border M&A of China created a new dimension that impacted the economy and created risks. The mergers in general impact various aspects such as the economy, culture along with human resources. The raising awareness, cultural distance and dynamism affect the merger business prospects. It is noticeable that the cultural differences, attitude of people and shared identity impact the business.

The main risk that is faced by the business is regarding the cultural risks that affect purchase behaviour, conflicts and changing demands. In spite of the changing environment with respect to political along with economic uncertainty the volatility of the market, stocks and trade wars affects the cross border M&A. It has been observed that global M&A have reflected several hyper activities that impact the process. The cross border M&A faces risks in terms of national security as per the regulatory agendas impacting the foreign investments. The political climate and the policies of the countries plays a strong role is determining and analysing the risks. Politicisation of antitrust and merger was witnessed with the AT&T/Time Warner case as it faced various challenges which required judicial scrutiny for effectiveness. The trade relations, national transactions and the trade dynamism affect the business and focuses upon international relations so that the business is well collaborated.

Cross border M&A faces political risks and it is determined from the case of China which faced issues from developed nations in terms of suspicion. During the process of successful acquisition the political environment faces various aspects in terms of discriminatory policy. The case of CNOOC was a deep affair as it posed threat to the national security leading to failure in terms of integration and communication. To avoid political risks it is vital to strengthen policies and eliminate misunderstanding so that the business in well integrated. For the business to be successful the host government along with the other countries needs to have a relaxed political environment so that the business is successful. Considering the cultural differences it is vital to understand the regulations along with customs so that the development is effective mitigating the challenges. The challenges that the merger faces is a strong opposition from the trade unions due to lack of awareness and insecurities. To mitigate the issues the main factor is to understand the foreign laws and labour laws. The merger must create good image and fulfil the responsibilities without violating the laws. Chinese business faces cultural differences during cross border M&A with the western companies because of the cultural differences and characteristics. The business approach and values are different between the two foreign cultures thus affecting the business. Thus during the M&A process the first aspect is to value each other differences and understand the fundamental values so that business is developed meeting the changing demand of people.     

Another important risk is about the human resource integration which impacts the business. It is worthy to note that M&A majorly impacts the human resource integration. It is important to note that mergers and acquisitions forces executives to lose their jobs creating insecurity. It is reviewed that senior employees tend to leave the jobs after the M&A because they are not able to understand the change in the management style. The style of management creates difficulties for instance the style of management of China and western countries are different thus affecting human resource integration. This forces human resources to resign as they are unable to handle the management style. The conflict within the management affects the process of talent retention affecting the business in the future. The M&A between BMW and Rolls Royce affected the retention of talented employees because of the styles of management and approaches. The difference affects the mergers and creates risk and the same was faced by BMW as it had to sell Rolls Royce. The M&A needs to be well communicated and the practices need to be well recognised so that the business integration is successful. The style of management, process of incentives ad performances appraisal systems are different thus the main aspect of the business should be to retain talents and offer incentives.

Thus cross border M&A requires better understanding along with creativity so that the employment and industrial goals are met. The main intention is to maximise shareholders wealth and enhance credibility across the globe. The success of cross border M&A is dependent upon good management, shareholder activism, managing data and understanding the political rules and regulations. It is reflected that the market is of sellers therefore the idea to M&A is to expand through strategic measures so that the risks are mitigated and profits enhanced. I realised that the main risk factors of cross border M&A are tax law, regulations, political stability along with financial deals. Thus the global integration is usually complex due to corporate legal and regulatory considerations. Legal entity rationalisation is another issue that impacts the M&A for better future.