Merger Analysis for Global Payments and Total System Services
The successful merger and acquisition between Global Payments Inc. and Total System Services (TSYS) Inc. is the latest pact involving giant financial technology companies in the United Kingdom (U.K.). The exciting news for the merger deal’s closure was unveiled on September 18, 2019, by the company’s Chief Executive Officer, Jeffery S. Sloan, through TSYS/Global Payments website. According to Sloan, the partnership will introduce complementary payment services that will increase service efficiency to customers, businesses, and financial institutions (Sloan 2019). Sloan further pointed that the “new firm” will realize the efficiency of conducting business activities through faster transactions, a higher rate of authorization, enhanced accuracy of transactions, and improved fraud detection (Sloan 2019). In the deal, the companies agreed to combine their stock transactions worth $21.5 billion.
The year 2019 witnessed mergers of giant fin-tech companies such as Fiserv (FISV) and Fidelity National Information System (FIS). However, Global Payments-TSYS collaboration remains the most outstanding and thriving in the industry (Horn 2019). The Global Payments-TSYS merger and acquisition adopted the modest cost synergies that reduce operating costs while steer growth progressively (Horn 2019). Agreeably, the acquiring operation status practiced by the previously independent firms increases the overall economies of scale for the merged firm. The combination increases the competitive advantage of the combined firm in the industry. The merger and acquisition will position Global Payments at a better place in the highly evolving acquiring sector. International expansions remain the game of the day for business enterprises, and acquirers target global markets by combining their operations to grab vast opportunities (Gulanowski, Papadopoulos & Plante 2018). The resultant impact will be a significant stabilization of Global Payments’ economic moat.
The Global Payments-TSYS merger’s success is also proven by the current e-commerce wave that is driving merchants to search for Omni-channel transactions. Fraud is emerging as a critical issue in online transactions, and the banking sector is striving to develop models and strategies to curb incidents of fraudulent activities in banking institutions (Zhang et al. 2018). The merger implies that data will be combined from the merchant and the consumer side, thereby assisting Global Payments to neutralize fraudulent acts and attain a successful transactional model. The financial technology industry is shifting towards integrating business with software to enhance transactions, detect fraud, and increase business data usability (Wamba & Mishra 2017). As such, the all-stock deal exhibited by the Global Payments-TSYS merger offers Global Payments the modest leverage and ease to utilize business software and strengthen its profile in various aspects in the industry.
Lewin’s Change Management Model
Lewin’s model relates to the Global Payments-TSYS merger and acquisition case in various ways. The change model consists of three main steps necessary for managing change in an organization, namely; unfreeze, change, and refreeze. The unfreeze perception involves preparations for a change initiative to understand the importance, need, and meaning of an organization’s intended change (Rosenbaum, More & Steane 2018). When Global Payments first announced an impending merger and acquisition on May 28, 2019, it had to explain to its stakeholders the need for the change by citing problems consumers experienced when searching, shopping, and paying for products on e-commerce sites. It revealed the key characteristics necessary to enhance customers’ checkout experience when engaging their retailers (PYMNTS 2019). This step helped to “unfreeze” the existing perceptions and explain the need for the change and its connection to profit-making.
The “change” stage is when the actual transition occurs. The transition or change often takes unspecified time to be completed because embracing new developments in an organization requires an unpredictable period. During this time, there needs to be a reassurance of good leadership as guidance to realizing the change through effective governance and communication (Rosenbaum, More & Steane 2018). When Global Payments first announced its plan for a merge with TSYS, it unveiled its new leadership structure where Jeff Sloan (the CEO of Global Payments) would represent/govern the merged company and Troy Woods (TSYS CEO) would be the chairman of the merged company (PYMNTS 2019). This was the leadership combination that would ensure the two companies attain merger status to expand their financial technology industry services. Time is a critical factor of change, and the change process involving the two companies lasted for nearly three months before Sloan finally announced the actual transitional success.
According to Rosenbaum, More & Steane (2018), the third stage of Lewin’s change model is refreeze, where an organization gains gradual stability as the staff and organizational processes begin resuming to their normal paces and routine. This stage requires the management to guide the people in ensuring that the changes introduced are practices and lead towards achieving the objectives needed (Hitt, Harrison & Ireland 2001). Regarding the Global Payments-TSYS case, the refreeze stage is being experienced by the company in its first year in the merger as it tries to compete with other financial techs in the sector. This stage involves dealing with challenges of the new face and addressing each challenge as it unfolds to ensure that the merger’s purpose is fully attained. The merger and acquisition of Global Payments is certainly a great success to the respective firm and the entire fin-tech industry in terms of improving financial transactions.
