Overcoming the challenges and issues of post merger integration (PMI)

Merger and acquisition (M&A) transactions have reached unprecedented levels over the past few years, and their occurrence in APO member countries has also been on the rise. M&As are attractive as they create synergies and economies of scale by expanding operations and markets and contribute to eliminating inefficiencies and increase productivity and profitability. M&As are also powerful and pervasive, they may have other intended and unintended effects at the macro and micro levels. Company stock prices, for example, can change markedly due to attempted or actual M&As. Companies not directly involved in M&As can also be influenced by their occurrence elsewhere in the economy. Higher employee earnings in merged companies, for example, increase the demand for other goods and services when employees spend their incomes.

Large M&As may affect the entire economy. They may lead to significant changes in the structure of employment, employee earnings, and investor behavior. Given the complexity of M&A transactions and the massive effects on businesses, industries, and economies, it is therefore important that policymakers and regulators understand their implications. Likewise, executives need to understand the nature of the acquired business, corporate governance, and different organizational cultures, systems, and financial practices so that effective results can be achieved and the post-M&A integration challenges minimized.

The APO organized two study meetings on the topic of M&As in 2007 and 2008 to emphasize their significance to the member countries as well as deal with some of the issues raised above. The meeting in 2007 was held in Kuala Lumpur where participants representing industry, unions, government, and academia examined various aspects of M&As. A follow-up meeting was convened in 2008 in Yogyakarta, Indonesia. This volume presents selected papers from both meetings. Since the context in which businesses operate have changed so drastically over the past two years, those papers will have special relevance in today’s changed context, as many businesses are more cautious, while those well endowed can seize the downturn as an opportunity to make further acquisitions.

I sincerely hope that this new publication will act as a catalyst for further research and publication on M&As in the region. The APO thanks volume editor Dr. Ganesh Chand as well as the authors of each chapter for their contributions.

Shigeo Takenaka
Secretary-General
Tokyo, June 2009