Mergers and acquisitions to increase in Asia-Pacific

Sunday, 24 September 2006, 07:00 Hrs
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Singapore: Merger and acquisition (M&A) activity is poised to rise in the Asia-Pacific region during the next few years, but companies are not paying enough attention to human-resource issues, according to a study reported Monday.

Leadership assessment and cultural fit are being neglected in favour of short-term objectives during due diligence, said Hewitt Associates.

Human-resource factors hold risks to ultimate success, said the Mergers and Acquisitions Asia-Pacific Study 2006, published in The Business Times in Singapore.

The study drew responses from 73 firms across 11 economies, including India, China, Singapore, Japan and Malaysia.

It said that 44 percent of companies in the region intend to step up M&A activities significantly in the next two-three years while 29 percent expect to see a slight increase.

Most of these activities are likely to be in pursuit of improved market access, combined business creation and coordinated strategies, the study said.

"Improved market access is by far the most dominant objective of companies growing through acquisitions," Hewitt said. "Too often, due diligence emphasises short-term liabilities, not long-term risks."

Hewitt noted that key reasons why deals fail include incompatible cultures, poor leadership, strategic misalignment and poor communications.

"A failure to address cultural fit can lead to chaos among employees," Eric Fiedler, Hewitt Asia's regional director, was quoted as saying. "When cultural integration is not carefully managed, a company risks losing its best employees and leaving others disengaged."

Source: IANS
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