The 7 Biggest Mistakes Personal Essay Writers Make

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The 7 Biggest Mistakes Personal Essay Writers Make

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Company Mergers And Acquisitions The Advantages And Disadvantages - Free Essay Example

Sample details Pages: 8 Words: 2498 Downloads: 7 Date added: 2017/06/26 Category Statistics Essay Did you like this example? Acquisitions and Mergers sounds like it is a never ending story , the markets are global and the competition is already impossible. Lots of research have already found that nearly 50 percent of mergers and acquisitions are not effective economically ; so what is the main reason that MAs are still on progress. The possibility of being unsuccessful is increasing. Don’t waste time! Our writers will create an original "Company Mergers And Acquisitions The Advantages And Disadvantages" essay for you Create order The reason is that these companies are basically large and they are based on complex systems , after merger process , if the activity still shows low performance , the lost might be more than expected . Also this negative situation brings another research process which costs extra to the business while requirement to be successful is getting less for the firms . The process which should insist more details and have a better illustrative level of the business. The aim of my proposal is to examine advantages , disadvantages and motives of mergers and acquisitions. To find out if they show difference through the Merger process and there is any change along last decennium. To find solutions to these problems sometimes quantitive financial analyses will be used and sometimes management performance data. The data will be gained from different industrial organisations . My work is to evaluate the previous researches and theories to mention advantages and disadvantages of this process. INTRODUCTION This dissertation examines the firms mergers and take-over situations to make informative illustrations about company amalgamations. Some chances may be necessary for companies in order to improve their adaptability towards changing and developing markets all over the world. These changes take some forms such as mergers of the companies to increase their power or take à ¢Ã¢â€š ¬Ã¢â‚¬Å" over of a firm by another one . Recent days , there is a tough competition between firms which produce exactly identical or similar products . The companies which keep doing business in the market by keeping their existing size stay behind some firms that merge their powers with others . In addition to these companies that have merger , the co-operations could be made with firms which provide production and logistic needs without any problems ; therefore , all work forces could be used effectively in appropriate profession. Furthermore , the companies which believe in adversity of the development by having a single product or service might try to reduce risk level by having a merger with a corporation which produces different produ ct or service. This may cause the company mergers. The possibly important point in the merger of a company is the tax benefits . The company which makes a merger decisions should make some analyses for the purpose of inspecting the propriety of the decision. The reasons of the merger should be investigated very well and the results à ¢Ã¢â€š ¬Ã‹Å" benefits should be presented beforehand. I will mention these points in my dissertation First of my dissertation will explain the meaning of the company mergers and the merger types and the reasons will be defined. In the process of the merger , the responsibilities of the companies will be presented and costing process will be explained. Secondly , historical development of the company mergers will be defined and the main company mergers in Turkey will be specified . Nevertheless , two examples of merger process will be explained with advantages and disadvantages respectively. LITERATURE REVIEW There are several motives that may be inside a MAs process . The common one is clear that the buyer company sees the MAs as a profit returnable business . Generally , researchers who have worked about MAs shows it as a different type of investment . Companies will work on acquisitions when they are the most profitable means of improving the business , gaining new techniques , producing different products or working on new countries , or creating new ideas and innovations . So , lots of the same reasons that influence an investment decisions would also influence merger activity ( Weston , Chung Hoag , Mergers , Restructuring Corporate Control 1990). According to Pitts (1977); internal growth and growth through acquisitions were equally attractive alternatives. Moreover Porter (1987) examined 33 larger firms and found that these firms had diversified their operations more through acquisitive growth than through alternative means. However , Porter (1987) discovered that acquisitions often resulted in unsatisfactory performance that in turn led to a large number of post-acquisition divestitures . Roll suggested that gains achieved through acquisitions or takeovers may have been overestimated if they exist at all (1986:198). Although there is some evidence to contrary , the most neutral and sometimes negative results achieved by the acquiring firm indicate that mergers and acquisitions involve trade-offs. For example , Fowler and Schmidt (1989) found that performance declined after a tender offer acquisition (using both accounting and stock market measures ) However , this general decline could be improved by previous acquisition ex perience and affected by percentage of ownership and firm age . Hopkins (1987) found that acquisitions often led to a decline market position . Mueller (1985) reported that companies acquired in conglomerate and horizontal acquisitions experienced substantial losses in market share . Another trade off is demonstrated by Pitts (1977) results showing that firms following an acquisitive strategy invested less in RD than did internal growth firms. Harding Rovit (2004) Mastering The Merger , briefly defined the four critical decisions that make merger successful or simple break the deal. This book is generally talks about the complicated , fast moving and sometimes high rewarded side of corporate deal making. By the help of this book I will have opportunity to learn how to deal in ways that will be useful for my dissertation. Basically , Mastering the Merger is insist of numerous ideas that a manager faces on the top of the dealing process. Moreover , by focusing on the four decisions that is important most , it will help me to clear and simplify complex ideas about merger process. However this book is not a technical book where I can find techniques or it will not give one by one control list. According to Harding and Rovit , most senior executives think that they are pretty good decision makers because of having a strong track record. But when it is time to make decisions sometimes standards changes. The point what I will us e from this book is to learn practical ways to manage a deal. Grundy Slack (2005) gives information about mergers and acquisitions clearly. Generally the book talks about the adding value of mergers and acquisitions to companies . In contrast by arguing about adding and destroying value of mergers and acquisitions , it gives chance to me to inspect both sides of the problem. Moreover it includes about historical overview , case studies , examples from EU and ASIA and alternative perspectives of mergers and acquisition activity that I will mention in my dissertation . Also this book is more technical and consist of theories more than Mastering the Merger. By reading this book I am planning to define success of MAs and measure the impact of acquisitions on shareholders returns with examples from history. Watson Head (2007) suggested that the fundamental problem that faces financial managers is how to secure the greatest possible return in exchange for accepting the smallest amount of risk. Obviously this book will help me to write about merger activity more about accounting side. Also it mentions the trends about take over activities and gives real life examples from different companies. It also briefly mentioned about divestment point that the other books didnt. Furthermore it clearly shows the financing of acquisitions. Also there is one more point , which I couldnt find in any other reference books , about empirical research on acquisitions. Lumby Jones (2007) describes the merger process and technical terms such as synergy , revenue strategy , cost synergy , tax synergy , financial synergy , valuing synergy e.g. This book takes merger process and defines it simply by explaining technical terms to the reader. Furthermore it shows the potential complications that surround an acquisition decision. Previously , financing acquisition took place in Watson Head (2007) and also this book gives wide information about this process. Also take over defence is the other point what I will use information from this book. According to Lumby and Jones , takeover defence works if a company is subject to takeover bid that is unwelcome to the management team . Therefore they defined early warning system , city code and three stage defence strategy. Arnold (2005) examines the reasons for mergers ranging from the gaining of economies of scale to managerial empire building. It tries to find answer to this question if shareholders of acquiring firms gain from mergers or not. According to him less than one half of corporate mergers do the shareholders of acquiring firm benefit. Moreover it examines the merger decision process clearly and giving the definitions of merger , acquisition and takeover by mentioning the differences between them. He also mentions UK merger activity statics from 1970 to 2002. As the other books show , this books mentions what drives firm to merger widely. On the other hand he mentions the tactics that a company have take before and after the merger. In other words he gives clues to make merger process as successful as it can be. Copeland , Weston Shastri (2005) clearly defines the merger activity with theories and alternative growth strategies. Furthermore , it carries out a systematic research about mergers from past till today and study on the current merger models. Also it lists merger activity data from different countries together with MAs adjustment process. It also briefly mentions the ways to be more successful on MAs process. Brigham Ehrhardt (2007) mentions the merger process as the other book does. However , it point out the track record for acquiring firms in large deals has not always been good. In other word Brigham Ehrhardt mentions the negative ways of merger process with unsuccessful examples from different companies and merger mistakes . Moreover it explains the process with mini case studies . METHODOLOGY This dissertation will be semi qualitative and semi quantitative. There are varieties of data that I need to collect either qualitative and quantitative. The reason is that I will examine the managers behaviours and decisions at the same time I want to clear the MAs process as theory covers. Also I would like to show statics and use real business examples about management faults. Generally, I am planning to use case studies to explain the process widely with examples and simplify the theory. First of all I want to examine the automotive industry and I will use a case study to show the process from this industry. I will try to define the process with statics analyses and I will examine the results of this merger process. Also I will use online secondary data from websites of these companies and various related websites that will help me to make richer my dissertation. Moreover , I am planning to collect online secondary data from consultant companies about MAs and chosen company. I will also use the accounts of the companies which I will examine as case studies in my dissertation. They will be useful for me to make decisions about the previous and present economical performance. At the same time it will be useful and easier to explain the strategic decisions of the company . Also I will have chance to compare the success of MAs process by looking at the accounts of the companies. Moreover , I am planning to use the journals and economy news to add complementary ideas to my dissertation as secondary data . So by the help of authors and writers point of views , I will hold the control of my research easily. Basically , there are some limitations on MAs process to collect data about companies. it will be useful to use up to date information. So the data ,which I will be collected, will not be affected by the changes . Furthermore , I will request information from the companies which I will use in my dissertation as case studies. If it will be possible to gain information , I will have valuable information for my project and at the same time it will be primary data . I will try to use sources as many as I can to make my research richer to explain the MAs process effectively and answer the questions that I asked in the beginning of my proposal. BACKGROUND OF THE STUDY Mergers and acquisitions are becoming more popular year by year .But this process is very hard and the world is getting one economically . This situation brings more research prerequisite at the same time being successful is becoming harder for companies. Most of the researchers think that mergers and acquisitions coming to its end but in my point of view it is opposite . In contrast there is an issue about mergers as they cannot be successful anymore . Lots of researches have found that 50 percent half of mergers are not successful economically . Black and Carnes (2001) briefly defined that for 5 years period the profit were negative for MAs through 1985-95. Moreover Thomas Hogarty mentioned mergers as risk takers in 1970. So there must be a reason about why MA s are still being done. According to Jay B. Barney; if cost of MAs process is higher than the returns gained from by buying the company then it is not possible to expect a high economic performance. Assumption to this sentence, if there was a market to trade companies which guarantees to work rivalry then no one expects extraordinary profits. Basically , capital is the only driver behind MAs. But this process is not so simple although managers make decisions rationally , there are lots of facts that affects making decisions . There is an experiment which was made to a Turkish company that used outsource for its back office on integration . The results satisfied the management and showed that they reached an optimum growth rate by outsourcing .Cost saving is a way of increasing the financial performance after merger process . Managers of a company have to exploit situations such as overvaluation and opposite when firms over value or manager make systematic faults then they have to turn back and correct these mistakes . Moreover, they are optimistic about outcomes which they fell like it is under their management . All these above shows the importance of corporate governance and managers must behave carefully not harm the company. If there will be a failure , it damages the company either the manager. I will use this theory to undertake merger process in my dissertation . The data of MAs performance process will be taken from dissimilar industrial companies. I will examine different companies from different parts of the world so we can say that this research will be general and global. Also different merger and acquisitions show differ from each other. Moreover , it affects the motives for MAs. To conclude my sentences above I will use the behavioural power of people and theories to find out peoples reactions and movements . Theoretically this research will fill the lack of misunderstanding of the merger process. Past acquisition and merger performance will analysed between companies with motives .

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