OPERATIONAL AND FINANCIAL CONSEQUENCES OF MERGER AND ACQUISITIONS (Case: Nigerian Banking Sector) (MANAGEMENT PROJECT TOPICS AND MATERIALS)
ABSTRACT
The aim of this thesis is to establish the operational and financial challenges in mergers and acquisitions using the Nigerian banking sector as a case study. And also to proffer solutions on how these challenges can be mitigated or reduced.
The Nigerian banking sector has undergone several consolidation- mergers and acquisition and consolidation in the banking sector is still an ongoing process. The operational challenges experienced at the early years of operations of merged banks include: Information Technology (IT) issues, Human Resource (HR) issues, Communication issues and amongst others. The Financial issue is majorly on the maximization of the shareholders wealth of the merging banks.
The research methodology used was both quantitative and qualitative methods. For the quantitative aspect, online questionnaires were sent to employees of four different banks that have undergone consolidation process (two banks that merged and two banks that were acquired by other banks) and the feedback from the respondents were critically analyzed with the underlying theories. The qualitative method was the review of financial reports of one of the banks prior to merger/acquisition and after the merger/acquisition.
On a final note, conclusion was given.
Keywords:Â Operational, Financial, Consequences, Mergers, Acquisitions and Bank
1Â INTRODUCTION
Mergers and Acquisitions are the consolidation processes of companies where two or more companies come together to form a single entity. Merger is simply means the coming together of two or more companies with the aim of expanding business operations while acquisition is when a company takes over the business operations of another company.
The number of companies that are being consolidated either through mergers or acquisition has been on the increase globally and since this involves the coming together of two or more different companies with different business culture, there are some operational and financial challenges that are usually experienced in the early period of new entity before the parties are fully integrated together.
Nigeria is however not an exception to the wave of mergers and acquisition, as this is experienced largely in the banking, automobile, information and communication technology, insurance, capital market and securities sectors of the economy. The researcher experienced the operational challenges in one of the Nigerian banks that underwent the merger process and these challenges impacted on the performance of the employees.
1.1Â Â Â Â Â Background of the study
The Nigerian banking industry has gone through and still continues to experience consolidation processes in the form of both mergers and acquisitions and presently there are about 20 commercial banks from the initial number of over 120 banks. The mergers and acquisitions in the banking industry are seen to have contributed to a sound and financially stable banks in Nigeria.
The operational challenges experienced at the early years of operations of merged banks include: Information Technology (IT) issues, Human Resource (HR) issues, Communication issues and amongst others. The Financial issues are majorly on the maximization of the shareholders wealth of the merging banks.
1.2Â Â Â The Statement of Problem
Though the banking industry in Nigeria has been transformed through mergers and acquisitions, there are some operational challenges experienced through M&A and these include: human resource issues, psychological issues, communication issues and information technology issues. The financial challenges is majorly on the maximization of the shareholders wealth of banks after mergers or acquisitions
The research work is on the operational and financial challenges in Nigerian banks that have undergone both mergers and acquisitions and proffer solutions on how these challenges (especially the operational ones) can be mitigated or reduced.
