Corporate Governance And M&A Activity in Hospitality: Boards, Shareholders And (Potential) Conflicts of Interest
September 12, 2016 10:35am
By: Thomas Mielke | Andrew Hazelton
Consequences of M&A activity in the hospitality industry are increasingly making headlines, fuelled by a greater complexity of owning- and operating structures and an ever larger number of international stakeholders… What are the best practices to protect oneself from unwanted consequences?
Earlier in the year, third party owners and franchisees raised their voices about the Starwood-Marriott USD $12.2 billion merger. They challenged the firms on the potential violation of their exclusivity agreements (prohibiting the brand-partner to own, manage, operate or franchise other hotels within a certain geographic parameter). M&A activity will not be phased by such temporary “set-backs” as evident by the continued consolidation that the industry is witnessing. Yet, there will always be parties that feel they “drew the short straw”… Merger challenge litigation is thus likely to increase – so what is the Board of Directors to do to protect their businesses and shareholder value?
The “Case Files”
In the recent past, the hospitality industry has witnessed very public shareholder disagreements concerning M&A activity involving global players in the sector – let’s look at some “case files”:
Protective Actions by the Board of Directors
The world is an increasingly smaller place to conduct business in – hospitality organizations are (becoming) global players and their development and investment partners are continuing to geographically diversify their interests. It is therefore not surprising that there is a greater number of potential conflicts of interest to arise. Yet, the at times Hollywood-esque and very public “shareholder fights” certainly do no good to any party involved in a take-over or potential merger situation. It is the board’s responsibility to ensure a “smooth transition” from a corporate governance point of view – one should make sure to have those boxes checked. A reminder on sound corporate governance best practices and appropriate board structures can be found here whilst the below bullet points highlight some of the obvious but often forgotten facts to:
This article was originally published in Hotels Magazine.
Tags: thomas mielke,
aethos consulting group,
As a founding partner of AETHOS Consulting Group, Thomas has a track record in successfully placing senior executives at leading hospitality companies across the EMEA region. He is an AESC certified consultant and is working together with travel wholesalers, real estate development firms, investment companies and sovereign wealth funds as well as leading restaurant brands in identifying key talent and has joined forces with clients in establishing compensation schemes as well as organisational structures and workflows.
Contact: Thomas Mielke
+44 (20) 7065-1392
Andrew Hazelton is Managing Director at AETHOS Consulting Group. An experienced recruitment consultant, he has over a decade of retained executive search experience in a variety of industries, including hotel, restaurant, gaming, real estate, finance, and technology. Prior to joining AETHOS Consulting Group Andrew was with HVS Executive Search and spent six years with Korn/Ferry International. Throughout his career he has been responsible for completing a number of C-suite searches globally. He has authored a number of articles on executive selection, general HR trends and compensation for the hospitality industry. Andrew is a graduate of The Pennsylvania State University, an active alumni member, and a member of the Penn State Hotel and Restaurant Society.
Contact: Andrew Hazelton
+1 (267) 462 4455
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