Banking reforms: Merging parties must have similar cultures, values
View(s):A forum held on Tuesday discussed the ways to perform mergers and acquisitions successfully, and served as a guide for companies, especially those to be affected by the restructuring of the banking sector.
Organized by the Institute of Chartered Accountants of Sri Lanka (CA) and the Institute of Personal Management (IPM), the CEOs’ Breakfast Forum was held at the Kingsbury on May 13.
The reorganization of the banking sector is to reduce the number of finance companies in Sri Lanka from 58 to 20 by encouraging larger companies to absorb smaller ones, and for some small companies to merge together. The lead speaker Prof. Vasanthi Srinivasan, Associate Professor in Organizational Behavior and Human Resource Management at the Indian Institute of Management, Bangalore, spoke on “A New Beginning through Strategic Alliances”. She detailed examples of previous mergers and acquisitions, both failures and successes, and presented a guide for companies involved to follow.
According to her, what makes a good strategic alliance between companies is: similar culture and values, shared metrics, and compatibility in their governance structures. “Mutuality, reciprocity, respect, and trust are the hallmarks of partnership,” she added. In the discussion, panellist Janaka Kumarasinghe, former president of the IPM, added to this by saying that parties in a merger should understand different business cultures and be open to integrate their practices with the other.
When implementing a partnership, Prof. Srinivasan explained that companies need to approach the merger with a “post-merger mindset”. An integration committee should be set up to oversee the process and even after the merger is complete an effort should be made to keep the functions going.
(JS)