The paper here studies the effectiveness of the mergers and acquisitions and also the limitations of the overall process in gaining the profitability of the newly formed company. The role of Merger and acquisition: Most organization incorporates the strategy of the mergers and acquisition only in time of crisis faced by them. As a result the organization entering in to the process fails to critically look in to several issues like the strategic fit, and the risk involved with such strategies. The shareholders value in the firm takes a major setback due to such hasty decision making, from the companies’ behalf. The organizations should critically analyze the role play of such strategies. Generally there are various roles which are carried out by the undertaking of an effective merger and acquisition strategy. (The Boston consulting group, n. d) Mergers and acquisitions can create opportunities for the organizations to lower the respective cost of various expenses incurred. The incorporation of the merger strategies by the organization helps them to establish a new set of business model which can result in gain of productivity of both the organizations concerned. The overall market position can also be improved by the successful implementation of the strategy. Overall the mergers can create opportunities for an organization to gain new capabilities or simply add to their existing skill set. (The Boston consulting group, n. d) The success factor of the mergers and acquisition can lead to a gain of the scale both in measures of scale and scope. A successful merger can lead to the elimination of various risks associated with the execution of the business. The option of leveraging the asset of the acquired organization with that of the other organization provides huge financial benefit for the organizations. A successful merger can also lead to tremendous growth and diversification of the organizations. (Hunt, 2009, p.212,) It has been noted that the recent trend suggests that the organizations are failing to apply the strategy of the mergers and acquisitions in a proper fashion which has contributed to the overall failure. The fine line between the success and the failure of the mergers can be based on significant factors. As the mergers and acquisitions of the organizations leads to a complete restructure of the companies, proper effort form the management is needed to be careful after the implementation. Other than the financial and market factors organizations also needs to be careful regarding the human resource planning. . (Mergers integration, n. d)The failure of the mergers can significantly hamper all levels of the organization. Due to the non achievement of the expected gains of the organization the shareholders are affected at the beginning and it leads to their discontent. The most severe implication of the failure of the mergers can result in the accumulation of more amounts of losses for the organization than the gains which leads to the decline of the value of the shareholders. The failure can lead to a complete business tragedy for the organizations by factors like decrease of productivity, and customer satisfaction and loss of reputations of the brand name. (Mergers integration, n. d) Reasons for failure: The reasons for the failure of the
Mergers and Acquisitions Part A Mergers and acquisitions have become a new strategy for the organizations in the present competitive world to have a firm stand in the market. Organizations struggling to make a mark in the market often take the help of other large organizations to revive their current situations…
Since the past decade, the globalisation of the businesses across the globe has initiated a search for the competitive advantage, worldwide. With the increased competition to fetch the customer satisfaction in a cost effective way, the companies have responded to the pressure of attaining scale in a quickly consolidating global economy
Moreover, it can also enhance business or operational performance of the organisations at large. Through M&A, organisations can attain higher economies of scale and greater operational effectiveness. However, the impact of M&A has been viewed to be quite different on the basis of different industry type.
Most companies carry it out to improve their business fortunes.
The terms mergers & acquisitions are generally used together or sometimes even interchangeably but there is a sight difference in the two terms. Acquisition takes place when one company becomes the owner of another company in a way that the company sold ceases to exist and the buyer company continues to trade its stock.
When the performance of a firm is improved - within the context explained above - it is expected that the shareholders are going to be benefited; in many case the increase of shareholders value has been found to be related with the development of a M&A process; however, the specific outcome is not guaranteed.
The latter part will try to find the causes for such failure and will end with a lesson of what should company learn from these merger and acquisition failures.
Merger or acquisition is a strategy (Churchill, Jr. & Peter, 1995) adopted for
There is a little doubt regarding the issue that changes in a business firm or in a corporate house are felt most in case of mergers and acquisitions. In the case of mergers, two similar sized companies decide to come together for mutual
ugh the method has been employed by many companies around the world, it has been reported that half of these companies fail to achieve their goals of merging. To avoid these failures, companies have been advised to observe best planning methods before engaging in the business.
The new economy is composed of a series of interactive forces that comprise trade liberalisation and globalisation1. Where trade liberalisation has heightened economic integration, globalisation has melted national limitations. Trade
des raising countries overall output as well as per capita income, small businesses play an active role in employment creation, establishing balances in regional growth and development as well as enhancing effective utilization of resources (Craig & Kohlhase 2006). All these
2 pages (500 words)Essay
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