Action Project

MIB – Module B 2012 Global Management Action Project Organizational Due Diligence for Cross-Border M&A

Overview This Action Project challenges you to apply your understanding of certain Global Management topics to the area of “organizational due diligence” for cross-border mergers and acquisitions (and other forms of foreign direct investment, as explained). The problem of crossborder expansion will be presented by the global consulting firm Communicaid, which assists clients in this area. Communicaid will also review team projects that are deemed by course Faculty to identify robust best practices that might be useful in real situations. The topic has been selected due to its importance in current global business practice and the fact that it involves mastery of the major topic areas of the course. It is anticipated that this will be the first project where Hult partners with Communicaid, and that successive generations of Hult classes will build on this foundation in the future. Background Just to look at M&A, many observers feel that the global business environment is ripe for a wave of mergers and acquisitions due to the abundance of cash on corporate balance sheets and the perception of limited organic growth opportunities. Business combinations across national boundaries have become an increasingly important feature of the global business landscape. The value of transactions grew from over $180 billion in 1997 to over $1 trillion in 2007, alone exceeding the GDP of such countries as Mexico, the Netherlands, Korea, Turkey, and Indonesia. In 2010 alone, there were over 150 cross-border transactions with a value exceeding $1 billion each. At the same time, research indicates that over 80% of mergers and acquisitions fail to enhance shareholder value and over 50% actually destroy value (Marks and Mirvin). Both research and common experience also show that participating in merged/acquired companies can be challenging from a human resource point of view and...