For most practical purposes finish my thesis, mergers and acquisitions are treated as synonyms. The main difference between these two appear to be in the method of execution. Sherman and Hart (2006) define mergers as “…two companies joining together (usually through the exchange of shares) as peers to become one.”. They define acquisitions as involving “…typically one company -the buyer- that purchases the assets or shares of the seller robbery essay, with the form of payment being cash, the securities of the buyer essay on school funding, or other assets of value to the seller.” An acquisition can be friendly as well as hostile. When the target company’s management are receptive to the idea of the acquisition and recommends shareholders approval, the acquisition is generally referred to as friendly [key-7]. Sherman and Hart (2006) provide the following objectives for mergers: Another important problem for this deal was the linguistic differences between the two companies. Although BMW’s top management could do business in English, the engineers and the middle managers were unable to do so. This created a lack of communication problem which eventually delayed the integration process. There were also substantial differences between the business culture of BMW and Rover. As Batcheler(2001) points out, the German direct approach was in contrast to the more relaxed approach followed by the British. A merger adds value only if the merging companies are worth more than each one of them. This section focuses on understanding the objectives behind the merger and acquisition activities and how they add value to the firms. The author aims to use the literature developed here to analyse the industrial case studies in the next section. [key-12] Owen, G. Extract from forthcoming book about the man-made fibers industry, 2010. [key-14] Pansari. Akzo Nobel Case Study. November 2009. [key-18] Sirower, M.L. The Synergy Trap. How Companies Lose the Acquisition Game. The Free Press, New York; 1997. [key-10] Macdonald, A. & Beavis, D. Seize the moment – Radical supply chain integration as a means of increasing shareholder value and enabling acquisitions to deliver on their promises. PA Consulting, 2001. 2 Industry Case Studies
Mergers and acquisitions are a major part of the corporate finance world that deals with buying, selling and combining different companies to form larger entities. They are one of the key activities of corporate restructuring and are worth millions of dollars. From a legal perspective, a merger is a combination of two or more firms in which all but one legally ceases to exist and the combined organisation continues under the original name of the surviving firm [key-7]. Mergers and acquisitions are undertaken by companies to achieve certain strategic and financial objectives [key-19] essay on books are our best friends, which the managers of the acquiring firm believe are beneficial to the company. Not all mergers activities are successful. KPMG found that 83% of mergers were unsuccessful in producing any business benefit as regards shareholder value. The objective of this post is to study M&A activities in two different industries – Cars & Chemicals – and to highlight why some succeed while other fail. In this essay, I will talk about the factors that distinguish the successful mergers form the unsuccessful ones. As this is an original piece of work the essay, please credit this blog (citations, linkback examples of essay body, etc) if you are using this in your research. The following table from Carlton(1997) how to write an analysis essay thesis, who cites Coopers and Lybrand’s (1992) study of 100 failed mergers what is not required of a thesis, summarises the key causes of success and failures of mergers: Sirower (1997) suggested that it is incorrect to judge the soundness of an acquisition based on what it would have cost to develop that business from scratch. For this case, it seems to be this same problem as BMW’s decision was partly based on the substantial cost difference between developing the technologies in house and buying it from Rover. BMW didn’t achieve the synergies and ended up spending ₤2bn and sold the company off to Phoenix Consortium for a token sum of ₤10. Behind the acquisition of Rover by BMW, there was certainly a strategic motive and proper plans of gaining synergies. However, the acquisition was unsuccessful because they didn’t plan the entire process well. Palmer(2003) quotes both Kloss and Boorn in describing how the strategic plan got stuck in the upper echelons of the hierarchy due to lack of communication and coordination. BMW’s integration plan suggested a three phase process in which the initial two years were ‘wasted’ in just providing financial help without any integration of the two companies. It was 3-4 years before any concrete integration plans began and only in 1999 were the two companies fully integrated [key-16]. [key-8] KPMG. Unlocking Shareholders value – the keys to success. Mergers and Acquisitions – A global research report, 1999. [key-19] Sudarsanam, S. The Essence of Mergers and Acquisitions, Financial Times/ Prentice Hall; 1995. BMW had a number of motives behind the acquisition of the Rover company. The primary among them was to grow. BMW wanted to increase their market spread while achieving a greater volume spread [key-16]. They saw Rover, which came up for sale at the right time as the perfect deal at that time. Rover had acquired significant cost advantages due to its association with Japanese production methods. They also had the front-wheel driving and the 4 x 4 technology that BMW wanted to acquire. The price BMW paid was deemed to be a bargain as the cost to develop the technology and the production methods from scratch were significantly more.
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