O.k. The basic reason why I asked that is to figure out if the corporate cultures are similar enough to determine whether you need to take any special action to blend the two. It sounds to me like they're fairly similar, so here's how I'd proceed. I'm assuming that there are no new legal hurdles to be overcome, such as complying with anti-trust laws or revising national business licenses.

First, you want to have some exchange of management personnel between the two companies. By this I mean have a small number of upper-level people from each company transfer to the other. This will allow the two corporate cultures to start blending and allow the two seperate entities to merge into a seamless whole. The idea here is to make sure that there are no clashes between personnel from the two parent companies and that communication is quick and seamless throughout the new entity. Part of this process is combining the two information systems (often by merging computer networks and standardizing applications) as well as accounting practices.

Since Pozoli has a long history, you would rather not force a sudden change upon them when possible. The exchanges of personnel will help both companies blend their styles easily. It sounds like Pozoli has a greater presence in many markets, in these cases, where Pozoli is in places Mancon isn't you will want to send Mancon's management personnel to learn the nuances of those particular areas and take lessons from Pozoli people. This will also have the effect of demonstrating to Pozoli that Mancon views them as partners rather than victims.

After the management structures are blended (or better yet, during this time), you're going to want to begin evaluating the new conglomerate for areas of duplicated work. Since both companies make personal care products, it is likely that there will now be some redundant operations that can be consolidated to acheive economies of scale. For example, warehousing and distribution can probably be consolidated, as well as some kinds of manufacturing and supply chain operations. Once you've found the redundancies you need to make a decision, whether to increase production to utilize the excess capacity or close them to reduce costs. More often than not, when companies merge, the decision will be to close them rather than increase production. At this point you need to determine whether any reductions in personnel will need to be done by layoffs or whether normal attrition (retirement, people leaving, etc.) combined with reassignment within the company is sufficient to bring the headcount down to reasonable levels.

Once the new conglomerate is functioning well and its costs are under control, it's time to begin evaluating whether there are new areas of expansion to look towards. Often, when one company buys another, it is with the intent that the combination of the two will allow new products. It is imperative that the conglomerate not take on major projects before its internal structure of communication and governance is working efficiently and that its costs are under control.

So, to summarize, first merge the two governance structures, including I.T. and financial systems. Second, reduce costs by eliminating duplicated work. When possible, you'd probably rather do this by attrition and reassignment, since layoffs hurt morale. Finally, once the ship is in order, begin looking toward the future and what projects the new company can begin to undertake.

I hope this answer helps. Let me know if there are any specifics I can add.

Colin


Edited by Colin on December 12 2006 at 10:49 PM