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Finance & Accounting
Pages 9 (2259 words)
Corporate Finance Introduction Mergers and acquisitions are playing an important role in shaping business activities all over the world, and are one of the main ways to achieve growth. In recent years we can see the boom in mergers and acquisitions across the world in almost all sectors.
At the time of stock market boom, mergers were more appealing. On the other hand, falling share prices can lead to a company being undervalued, and make it an attractive for acquisition. Mergers and acquisitions can either be value destroyers or value creators that depend on factors like company’s cost of capital, its strategies and decisions and cash flows generated from the business operations The performance is not related to the nature of an industry, instead it was driven by the quality and strategy of management. Good strategy by management can produce good results, on the other hand, poor decision and strategies may end with poor performance. For example fall of the company share price since Daimler-Benz's merger with Chrysler Corporation in 1998 is an example for poor management. Later, Dieter Zetsche, ECO, Daimler admitted that the merger was a mistake (Coursework.info, 2011). For any company, money invested today will certainly be worth less in future. In this regard, sound financial management is necessary for its survival and growth as attention should be paid for possible risks and ensures that performance spread remains positive. Shareholders' interest is the paramount objective for any company which will benefit the firm as well as the society at large. ...
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