Tackling mergers

            The biggest mistake that Saviotti, Abelli and Profumo made was failing to address the needs of the parties involved were met and that they were comfortable with the merger. The three young individuals were modern managers tasked with the mission to modernize the banking system in Italy and resulted to use a technical merit to frame the situation. However, they failed to address the needs of the two key players, Mediobanca and Cuccia, and this left them feeling threatened by the merger. As a result, the two resulted to mobilizing their extensive networks in a bid to influence board members and either directly or indirectly pushed them in their favor. An example of this is the case where Cuccia sought out managers like Desita and Fausti as they shared common ideals.

            In order to gain the support needed for the merger, Saviotti, Abelli and Profumo should have placed more emphasis into developing strong positions in the network of the merger so as to ensure that their actions were effective. This could have been achieved through the establishment and maintenance of strong working relationships with the government and the central bank. Good working relationships would have been an added advantage in showing everyone the benefits of the merger (Belingheri, Casciaro & Mcginn, 2003). Since the merger would have affected both organizations, the government and all shareholders, establishing good relationships with them would have provided the cooperation needed to ensure that the merger was a success. The relationship would have also created good lines of communication allowing for sharing of information which would have helped put the fears that Mediobanca and Cuccia had at ease.

            Another approach that would have made the merger a success is the same as the one Cuccia employed to get members on its side. The three should have targeted board members from both Cuccia and Mediobanca and all their allies and intervene so as to ensure that they would go along with the merger. One way to achieve this would have been to create a rift between them and provoke them into implementing a shareholders pact. They ought to have created a rift between Fazio and Bazoli so as to get the support of the central bank by curtailing Bazoli’s influence on him. Another approach would have been to make the foreign banks more susceptible by encouraging them to vote as a block as this would increase their stake and make them more receptive of the merits that the merger could create (Belingheri, Casciaro & Mcginn, 2003).

            Other than engaging in indirect means of encouraging board members of both companies to support the merger, Saviotti, Abelli and Profumo should have presented the merger as a development project that would push the companies into the future. The three should have presented the merger as a means of dropping the traditional, outdated and undesireable way of conducting business and replacing it with a modern, ideal and global way of operating in the future. In doing so, the three will have managed to convince the parties involved that the merger is not a risk but rather a change that would help them benefit from all the opportunities that the future had to offer (Belingheri, Casciaro & Mcginn, 2003).

            Lastly, Saviotti, Abelli and Profumo should have put more effort into discovering what each key player in the merger wanted and came up with ways to offer it to them. Mediobanca for instance did not want one organization to possess too much shares. In response, the three could have presented a solution where an organization like Unicredito rids itself off of Mediobanca sock following the merger (Belingheri, Casciaro & Mcginn, 2003). Although the approach that Saviotti, Abelli and Profumo took created more problems than solutions, they are problems that could have been solved had they taken time to evaluate the situation.

Reference

Belingeri M, Casciaro T and McGinn K, (2003) “Abelli and Saviotti at Banca Commerciale         Italiana (A)”