Additionally, Brakman et al argues that since most cross-border merger and acquisition activities belong to the category of an economic concept known as Foreign Direct Investment FDI.
Furthermore, the acquired organisation gain beneficial prospects as employees are provided with a clear perception of the acquiring goals, culture and work redesigning.
The culture is not normally recognised within the organisations, because basic assumptions and preferences channel the thought and intended actions operated at a preconscious stage. This is due to the availability of data.
However, the underlying business rationale and financing methodology for mergers and takeovers are substantially different.
Mergers and acquisitions 1. The most important step in any deal process is most likely to be the post-merger integration step. For example, back inAmerican Automaker, Chrysler Corp.
By replacing board members, proxy contests can be won by gaining control without owning The Replacement Cost Method is ideally used for manufacturing firms that have a number of by-products.
According to Morck, Shleifer, and Vishny bthere are many theories that explain why managers resist a takeover attempt. A substantial acquisition occurs when an acquiring firm acquires substantial quantity of shares or voting rights of the target company.
In general, value is created in a merger and acquisition when the following key parameters are addressed. Stock purchases are the most common form of acquisition. Therefore, cautious proactive planning should be instigated by the acquiring organisation to reduce emotional consequences that alleviate the transition and reduce the risk of failure of acquisition and merger.
In a merger, two companies combine to form a new entity, whereas during an acquisition, one company seeks to purchase another. These include buying the wrong company for the wrong price, executing the wrong deal structure, or even making the right deal at the wrong time.
Researchers also indicated that there is a need for a more in-depth investigation of conditions under which these transactions create or destroy value.
Studies conducted to review overall merger performance and to identify specific determinants of merger and acquisitions success noted that many mergers and acquisitions fail to live up to post merger expectations Ramaswamy, It is likely that not every group mentioned will benefit from mergers and acquisitions, but a commonly accepted criterion is that the outcome is socially desirable if the benefits exceed the costs.
This has all the makings of a merger of equals as the chairmen in both organizations became joint-leaders in the new organization. Creation of new task allows employees from both the acquiring and acquired are aligned to work together to get the job done.
Research analysing the determinants and causes of international bank mergers by Buch and DeLong concluded that economies of scale and scope is one of the major motives to increase the need and trend of international mergers.
The reason for this is because after the year merger and acquisition activities increased drastically as a result of the enhancements in the mining industry of South Africa. There are different types of mergers: Most studies however, conclude that mergers and acquisitions do not result in shareholder wealth creation.
As a result, issues start increasing. An example of this is the merger between Daimler-Benz and Chrysler. The post-merger integration has a major impact on how much of the value expected is actually derived and how long it would take.
This however, as most studies have shown, is not an easy feat as the exact costs of the whole process including any synergies are difficult to quantify.Chapter 1 Introduction"There is no more dramatic or controversial activity in corporate finance than the acquisition of one firm by another or the merger of two firms.
It is the stuff of which reporter's dreams are made, and it is also an embarrassing /5(7). This free Business essay on Essay: Mergers and acquisitions is perfect for Business students to use as an example. A typical merger, in other words, involves two relatively equal companies, which combine to become one legal entity with the goal of producing a company that is worth more than the sum of its parts.
Mergers and Acquisitions Essay. increasing and decreasing in volume in what has been termed merger waves since the late s (Sudarsanam, ).
at a broad range of evidence spanning the time following announcement to the fiscal years following completion of a takeover. The essay will briefly discuss the limitations of the evidence. 1 Definition of Mergers and Acquisitions While the terms mergers and acquisition are often used interchangeably, these two terms are different.
In the academic literature, there are a number of authors who define merger, acquisition and takeover differently.
Studies conducted to review overall merger performance and to identify specific determinants of merger and acquisitions success noted that many mergers and acquisitions fail to live up to post merger expectations (Ramaswamy, ).Download