Discuss the financial and legal management of mergers


Assignment:

According to the scenario, individual lenders will evaluate the potential of the proposed project and the likelihood of success before granting a loan to a small business. Researchers need to find out what key ideas or issues the loan officers are looking at.

Research Scenarios

1. HR Specialist Officers in the U.S. Navy

The U.S. Navy's recently formed human resources (HR) community was established to bridge a divide between government civilian HR professionals, many of whom lack an appreciation of operational requirements and the Navy's unrestricted line officers, many of whom lack familiarity with HR theory and large-scale human resources management. (Unrestricted line officers form the majority of the Navy's officers, and are the generalists who are eligible for command at sea.) These specialist officers handle a set of responsibilities that include manpower management, recruitment, education and training, personnel force management, administration, and human resource information technology.

They form one of the groups that support the main war-fighting missions of the Navy. Other such groups include shore-based facilities management and information technology management.

Because of its support-oriented non-war-fighting past, this branch of the Naval Officer Corps has a reputation as a community where male officers who could not measure up to the demands of war-fighting and women could support rather than participate in operational war-fighting activities. The HR community seems to be struggling to establish itself culturally as a viable part of the Naval Officers' Corps.

Anecdotal evidence suggests that there is a divide between what HR Officers provide to operational forces and what unrestricted line officers' believe HR Officers can and should provide. Moreover, there is evidence to suggest that Human Resources Officers' role in supporting fleet operational requirements does not meet unrestricted line officers' expectations.

If a present day HR Community is to be successful, breaking this paradigm and changing this perception are vital. Research is needed to better understand this problem and how it might be addressed.

2. Small Business Attractiveness to Loan Officers

Eight out of ten small enterprises in the United States require some form of credit to provide the capital needed to operate their business. At the same time, undercapitalization continues to be one of the major causes of small business failure. Unlike larger publicly held firms, small firms typically cannot access the traditional capital markets, but must depend on trade credit, informal sources of financing such as personal savings, and loans from institutions such as banks and Savings and Loan associations.

Obtaining financing through bank or S&L loans requires the business owner to demonstrate that his or her business and request meets the loan officer's criteria for acceptability. Lenders, in deciding whether to provide funding, will evaluate the potential of the proposed project and the likely commitment and capability of the company's management to ensure the success of the endeavor for which the loan is sought. Success for the loan officer lies in accurately assessing the risk of default; success for the requestor lies in convincing the loan officer that the risk is acceptable.

A small business owner/manager can increase the likelihood of success if he or she knows what the loan officer is looking for. How do they do make their decision? What are the core competencies in the management of a business which loan officers seek as they evaluate loan requests? Research is needed to better understand how loan officers go about sizing up a loan request from a small business, and making a decision.

3. Leadership During a Merger or Acquisition

Mergers and acquisitions are common transactions as businesses combine to achieve growth, diversification, and market share. Almost 7,000 transactions valued at $440 billion occurred in the United States in 2003. However, a report released in 2002 noted "Several well-structured studies calculate 50 to 75% of acquisitions actually destroy shareholder value instead of achieving cost and/or revenue benefits." Clearly, there is a large gap between objectives with which mergers and acquisitions are initiated and the actual outcomes they achieve.

This dismal record, along with the financial significance and public visibility of mergers and acquisitions, casts a spotlight on the leadership role. Leadership may be defined as the process of transforming organizations from what they are to what the leader would have them become. As each merger or acquisition transaction forms a unique blend of two diverse organizations, it is important to examine the role of leadership as businesses combine.

There are many books that discuss the financial and legal management of mergers and acquisitions; few authors delve into the depths of the role of leadership in these complex transactions. This disparity may possibly result from the debate concerning the differences between managers and leaders that has been waged for many decades. However, it may also suggest that the leadership experience is a more dynamic or complex concept that reaches beyond the nature and scope of popular business books focusing on transaction mechanics and checklists.

Research is needed on the experiences of leaders during mergers and acquisitions, to better understand what actions leaders can take to increase the likelihood of success of future transactions of this type.

4. Conflicted Positions among African American Clergy

"The general term Black Church can be taken to refer to the 16 to 18 million Christians in the United States who both claim and are recognized to have some degree of African ancestry and who are organized in congregations and other religious institutions in which the African American membership numerically predominates and is in control on the local level" (Cone & Wilmore, 1993, p. 217). These congregations and institutions have traditionally played a large role in the lives of their members, and their clergy have traditionally served as leaders and role models within the community.

Traditionally, these clergy are also conservative in their beliefs about moral issues, notably abortion and homosexuality. A 2003 survey of African American clergy showed that nearly three-fifths of those surveyed (58 percent) supported a constitutional ban on all abortions, except for those cases related to rape and incest or to save a mother's life, and 67 percent believed homosexuals should not have the same rights and privileges as other American citizens. This seems to reflect the underlying sentiments of the members of their congregations as well - for example, a 1995 survey of African Americans found that 74 percent believed homosexuality to be "just plain wrong."

Yet paradoxically, these same clergy seem to overwhelmingly support political figures who favor abortion and gay rights, primarily members of the Democratic Party. For example, it is estimated that 85 percent of African American clergy voted for Democratic candidate Gore in the 2000 presidential election. How do these clergy reconcile this seeming conflict between moral principles and political views?

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