THE END OF A STORMY RELATIONSHIP - a case study of an international business divorce and its organisational and emotional challenges

Abstract

The term divorce can be used in explaining many challenges of a demerger, showing similarities to the existing M&A process literature which commonly uses the term marriage. By studying a demerger one can gain insights to challenges met at various stages in a disintegration process. The findings of this study can therefore help companies to improve their allocation of their resources during the demerger. Although many M&As later are shown to demerge, the demerger and its disintegration process has not been subject to previous studies. The main finding is that the disintegration process can be divided into three main process phases; the pre-demerger, the disintegration, and the post-demerger. Various organisational and emotional challenges can be seen during these phases. Organisational challenges are shown to be; creating a new group management, the negotiation of contracts, restructuring the departments, and strengthening the brand and the product portfolio. Prominent emotional challenges are shown to be handling uncertainty concerning layoffs, new work procedures and work tasks, and creating “togetherness” among the employees.