Just do My Homework on Mergers and Acquisitions

One of the major mergers and acquisitions which took place over the last three years was that of the general motors and the AmeriCredit corp. at a cost of $3.5billion.

The circumstances that led to the merger

      The acquisition of the AmeriCredit Corp by the GM vehicles was informed by the demand for leasing as well as for nonprime financing for GM vehicles. The acquisition was aimed at supporting the efforts by the GM to design, build as well as sell the world’s best vehicles through the expansion of financing options for customers who buy their vehicles (Aharon, 2010). Thus acquisition of the AmeriCredit group would improve the competitiveness of the company in auto financing offerings.

With this acquisition, the GM would be in a position to provide avail captivating financing thus provide the customers with a greater ranger of financing options while at the same time creating a great growth opportunities for both organizations.

Why (two) reasons the resulting decision to merge or acquire /be acquired was made

The GM decided to acquire the AmeriCredit corp. meet the demands of both leasing and non-prime financing for its vehicles. The acquisition would allow the GM to support its efforts for design, building as well as selling the world’s best vehicles through the expansion of its financing opportunities and options to customers in buying GM vehicles (Aharon, 2010). Thus was projected at helping the GM to improve its competitiveness over auto financing offerings.

Secondly, the decision for the acquisition was made in order to establish the core of the new GM captive financing arm in order to help the GM to provide its customers with a deeper range of vehicle by availing financing options and opportunities. While at the same time creating a significant growth opportunities for both organizations (Reddy, 2013). For instance through this merger, he GM hoped to significantly increase of non-prime penetration while the AmeriCredit hoped to provide an expanded leasing availability for all GM vehicle customers. 

Assessment of the significance effects of the merger or acquisition

      Following the acquisition, the GM’s non-prime penetration has increased significantly and it is expected that upon completion, AmeriCredit group will again re-enter the leasing business in order to provide an expanded leasing availability for all GM customers. In addition, the resultant direct ownership of AmeriCredit group’s expertise will avail a consistent non-prime financing for GM customers over all the economic cycles (Reddy, 2013). The transaction will further enhance the already existing relationship between the AmeriCredit Corp and the over 4000 GM customers hence help in improving sales penetration through coordinated GM branding as well as other customer marketing initiatives.  

Two examples of those effects now that the merger or acquisition has been completed

     With the merger, the AmeriCredit group would now be in apposition to fully expand their products and set more support for the GM customers. For instance, the group would continue to offer their loans products to the more than 11, 000 dealers across the country which they serve today while in the long term, the transaction will lead to benefits to the dealers of both the customers and the employees in the two organizations.

On the other hand, the GM will benefit from the niche capabilities which in leasing products as well as other non prime financing in addition to the continued strong support of ally financing as well as others for prime retail and dealer financing. This will set up a very competitive solution for their financing needs which are very resilient through both credit and business cycles. 

The organizational culture that has resulted from the merger or acquisition

     The highly regarded management team in the AmeriCredit largely remained intact. This was aimed at helping to assist in minimizing the integration of risk as well as the minimization of opportunities between the two companies.

However, the under the agreement terms which have been approved by the board of the company directors for the two companies, AmeriCredit shareholder will each get $24.50 in cash for each share held as a means of transaction closing date. In addition, with a total asset of over $10 billion, the acquisition of the AmeriCredit by the GM possess a very minimal impact on the balance sheet of the GM Corporation, as such, it cannot alter the GTM’s general objective for a strong investment to grade status. Thus structurally, under the GM ownership, the AmeriCredit corp. will maintain its own direct access to the capital markets for its financing requirements.                                                 

The major differences between the resulting company and the original two organizations

     First, the merger gave the GM some financial roots which could enable it to expand its business by taping in to the consumers who otherwise would be affected by financial hardships hence making them unable to pay for their cars upfront (Cartwright, 2006). This allowed both the organizations to take advantage of and exploit the little opportunity in the poor economy under which the potential consumers were facing financial difficulties.

    The human management practices of the company which were modified to reflect the outcome of the merger or the acquisition

      The acquisition of the AmeriCredit corp. by the GM led to some human resource management modifications in order to reflect the outcome of the acquisition (Cartwright, 2006).  This was first aimed at the analysis of the merger turn over as well as the potential needs and trends occasioned by the acquisition with the different HR specialists in the different areas from each of the original organizations in relation to the new and additional needs with the resultant acquisition.

In addition, the acquisition of AmeriCredit corp. by the GM led to new approach in human resource management in the new corporation under which through consultations, new guidance and solutions were needed for the business leaders as well as the employees in regard to the resultant human resource management policies and programs. Such included benefits, compensation, performance management, corrective action, training on new skills, leadership as well as in recruitment (Harwood, I.2006). This was aimed at development of a new partnership between the original organizations and the resultant merger with the appropriate human resource and legal specialty in order to keep and look for areas of improvement which could allow the new organization to realize their optimum impact on corporate policy.

There was also a need for the modification of the human resource management polices in the new organization in order to implement strategies which could attract and retain high quality talent to work in partnership with the new departmental leaders all across the organization.

Sources:

Aharon, D, Y. (2010). Stock market bubble effects on mergers and acquisitions. The Quarterly Review of Economics and Finance, 50(4): p. 456–470

Cartwright, S. (2006). “Thirty Years of Mergers and Acquisitions Research: Recent Advances and Future Opportunities”. British Journal of Management 17 (S1): S1–S5. doi:10.1111/j.1467-8551.2006.00475.x.

Harwood, I. A. (2006). “Confidentiality constraints within mergers and acquisitions: gaining insights through a ‘bubble’ metaphor”.British Journal of Management 17 (4): 347–359. doi:1111/j.1467-8551.2005.00440.x.

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