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Mergers and Acquisitions - Essay Example

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Mergers and Acquisitions

It is done either through merger and acquisition where one company either devours another one or decides to merge together and form a new entity (Andrews and Smith, 2006). A significant number of these mergers and acquisitions either goes smoothly whether the companies emerge victorious and successful in the process, while in other case the deal fails to get through, and the companies suffer massive financial damages. a) Increased globalisation across the world has increased the number of across borders mergers and acquisitions around the world. The authors of the article named 'Dubious Logic of Global Mega-Mergers’, argue that most of the time the megamergers that take place, does not substantiate into something extra ordinary, as was thought to be. The article represents how the mega companies are still living under the shadows of the age old theory of the capitalists (Benner and Sandstrom, 2012). Most of the mighty and strong companies in and around the world strongly believe that the prevalence of one can only be guaranteed, if the prevalence of the others can be weakened. For example most of the big companies resort to constant and innumerable number of mergers and acquisitions in order to stay big and strong. ...
As companies engage in innumerable cases of mergers and acquisitions the length and breadth of the industry begins to get shortened. Thus slowly the industry begins to shrink and thus there remains only limited number of players. These players happen to call the shots. This argument is favoured by various researchers. Although the authors Cravens (2010) state that in reality there is no cause and effect relationship between globalisation and mergers and acquisitions. In fact globalisations after the World War II has lead to decreased concentration in certain industrial sectors. Companies engage in engage in merger and acquisition to take advantage of the economy of scale. Apart from that the other advantages are transfer of technical know-how, sharing of intellectual resources and other strategic advantages. The authors are right in their view that the history of merger and acquisitions is strewn with numerous failures but close review of the failures will indicate that the failures were partly due to the management incompetency (David, James and Arthur, 2011). Due to incompetency, the management of the acquiring companies could not evaluate the exact economic value and the subsequent risks. Despite the fact that the history of mergers and acquisitions are riddled with innumerable failures but there are various successes stories also. The following table indicates the mergers and acquisitions in and round the world. It is indicated that the number of cross border as well within the border mergers and acquisitions increased by almost 100 times in the last period 1995 to 2000. If there were no successful cases of cross border mergers, then the number of cross border mergers and acquisitions would not have ...Show more

Summary

Mergers and Acquisitions Section A Q1. Introduction In the last 5 decades there are more stances of cross border mergers and acquisitions than the number of lockouts and cases of bankruptcy. Although the number of cross border merger and acquisitions has increased manifold but the instances the number of cross border mergers and acquisitions has increased substantially…
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