Of cours ths findings dpnd on th sctor nd th typ of M& tht ws don. Mny fctors ply n importnt rol in th furthr succss of th compnis, nd th on, myb th most importnt cn b th knowldg nd bility to crt vlu ftr.
Mrgrs nd cquisitions, two forms of rstructuring, rprsnt both strtgic opportunitis nd thrts for compnis, s ownrship chngs hnds. Mrgrs nd cquisitions crry on stting nw rcords in both volum nd siz. cquisitions probbly r not th quickst wy to grow comprd to othr options nd, from th prspctiv of top mngrs, thy r stimulting nd oftn finncilly rwrding. Howvr, by most ccounts, cquisitions r pron to filur, with som hving disstrous consquncs.
Studis of th short-trm ffcts of M&s point out tht M&s gnrt vlu, vn though most of this vlu ccrus to th trgt firm. Rsrch in th US nd UK indicts tht th shrholdrs of th trgt firms xprincd gins of btwn 16% nd 45%. cquiring firms' shrholdrs, on th othr hnd, xprincd bnorml rturns rnging from -1.1% to 7.9%. Th combind firms' bnorml rturn ws btwn 1.8% nd 3.5%. (S Jnsn & Rubck 1983; Frnks & Hrris 1989; Bchr 2000; Mulhrin & Boon 2000; Kohrs & Kohrs 2000; ndrd t l. 2001.)
Th long-trm ffcts of M&s in th US nd th UK hv bn xmind xtnsivly (S grwl, Jff & Mndlkr 1992, Brns 1984, Frnks, Hrris & Titmn 1991, Grgory 1997, Knndy & Limmck 1996, Limmck 1991, Lodrr & Mrtin 1992, Loughrn & Vijh 1997, Mitchll & Stfford 2000, Ru & Vrmln 1998). Ths studis, lthough criticisd th mthodology, ll indict tht th shrholdrs of th cquiring firms in most instncs los vlu. Th ngtiv typicl rturns wr s high s -20%. Th crtion of ngtiv typicl rturns holds tru spcilly whn th mthod of cquisition ws othr thn by mns of tndr offrs.
Th min rson for M& to tk plc is xpctd synrgis, mngril hubris, nd promising solution of gncy problms. Synrgis r th prim motivtion for th bid nd s rsult for th trgts nd th biddrs tht shr th wlth gins. lthough most bidding compnis mk th sttmnt bout th potntil synrgis from th mrgrs nd cquisitions, frquntly th forcstd bnfits r not obtind. This cn b rsult of ovr optimistic forcst by th bidding mngmnt or simply th fct tht th mrgr for inititd for nothr rson, such s gncy problms. So ths thr tkovr motivs hv diffrnt outcom on th wlth crtd ftr mrgrs nd cquisitions.
If synrgy is th primrily motiv for th mrgr, thn th trgt's nd biddr's shrholdrs should gin nd th distribution of wlth should only dpnd on th brgining powr of th biddr nd th trgt.
If th scond motiv tks plc nd it mns tht gncy problm is worsning, th min slf-intrst of th biddr's mngmnt is th prim rson for th mrgr or cquisition. In such cs, mngrs just focus on growth rthr thn on th shrholdrs' vlu. For xmpl, Conyon nd Murphy (2002) show tht for th UK, siz (nd not th prfomnc) is th min dtrminnt of th mngril slris. This fct cn xplin why mngrs r so tmptd to us fr csh flow to furthr build th mpir tht hopfully will rsult in highr slris nd bonuss. No wondr tht ftr such circumstncs, th totl vlu ftr mrgrs nd cquisitions ctully gos down. Mngrs who r ggrvtd by prsonl intrsts, (.g. mximiz th siz of th firm nd thir fild of control) r mor pron to sk out lrg, wll known compnis s cquisition trgts - nd usully ovrpy in th bidding procss. This is n doubtful motiv for th cquisition of rltivly smll nd unknown privt compnis. Th cquisition of privt compny mor sily fits th motiv of mximiztion of shrholdr wlth.
nd th third motiv of M& cn b th