Based on my experience, most purchases or mergers of companies do not provide long-term value to the shareholders and customers of the organizations. In fact, there is value destruction and generally the expected synergies are difficult to materialize in terms of competitiveness, especially in the case of companies whose negotiating power in the M & A process is lower. Can you tell me your impressions about it?
A merger might provide some plants enhanced access to markets outside of the combined service territory, resulting in increased generation from those plants. If increased access to markets results in increased operations, there may be environmental impacts. Enhanced access to markets may arise if the merger results in lower transmission costs, lower marketing costs, or lower overall costs due to efficiencies gained through the merger.
Source - https://www.scotthemplinglaw.com/files/pdf/ppr_mergers_and_acquisitions0201.pdf
A merger might provide some plants enhanced access to markets outside of the combined service territory, resulting in increased generation from those plants. If increased access to markets results in increased operations, there may be environmental impacts. Enhanced access to markets may arise if the merger results in lower transmission costs, lower marketing costs, or lower overall costs due to efficiencies gained through the merger.
Source - https://www.scotthemplinglaw.com/files/pdf/ppr_mergers_and_acquisitions0201.pdf
Rather that sharing impressions, let's look at the research evidence:
Most mergers and acquisitions do *not* add long-term value. They are good for the agents (empire building business leaders) but bad for the principals (shareholders) and employees.
Cartwright & Schoenberg have reviewed 30 years of published studies and discuss issues related to strategic fit, organizational fit, and the M&A process.
Mergers or acquisitions of companies are undertaken to achieve the economy of scale of firms. Mergers and acquisitions are helpful in generating cost efficiency through the implementation of economies of scale. It may also lead to tax gains and can even lead to a revenue enhancement through market share gain. Another advantage is Synergy that is the magic power that allow for increased value efficiencies of the new entity and it takes the shape of returns enrichment and cost savings. M&A’s are considered as important change agents and are a critical component of any business strategy. The known fact is that with businesses evolving, only the most innovative and nimble can survive. On a lighter note M&A is like an arranged marriage, partners will take time to understand, mingle, but will end up giving positive results most of the times.
In reality it is not always yielding positive results. We need to consider the two or more companies profile considering their financial strength, administrative competence and other key variables before a successful merger could take and the one with positive results after the merger.
Potential shareholders should consider long term financial and administrative competitiveness of the companies they wanted to buy into.
Many financial experts strongly believe that merging leads to concentration which can be detrimental to competition. However, current research findings narrate a different story. They report that evidence concerning the indirect relationship between concentration and competition is not tenable because field observations reflect that concentration and competition may positively affect the profitability of individual organizations in the merging process resulting in stability of the merged industry enormously.
Well on my point of view the merging companies each had their economies of scale therefore an advantage to the organization being formed plus it might lead to a monopoly another big advantage to the organization being formed
В условиях российской экономики усиление процессов слияний и поглощения свидетельствует о тенденции к усилению позиций корпоративного бизнеса, получению ими конкурентных преимуществ, расширению и формированию экосистем. Особое значение приобретают эти процессы в условиях цифровизации экономики
Mergers and acquisition is culture bound. If there is corrupt practices that led to the downfall of a company in the first place. If care is not taken no matter the amount of capital, human and material resources injected into the business any method used will fail. The problem for the mergers and acquisition of the businesses must be properly diagnose and if possible the weak link - human resources can be replaced for new talented workers to come in and also block all the loopholes that competitors used to overpower the independence of the business in the first place. Don't forget the lean management strategy. Not how big the size of the company but the profitable and sustainable performance matters.
There are factors like cultural differences (specially witn foreing companies) , the relationship between the original stockholders and the new ones, in my opinion is not recommendable if exist a new kind of goverment policy who could affect the foreing investment laws (it is very dangerous from the point of view if the new goverment likes keynesian theories instead the Smith olds or anothe kind of economic polcy, the labor competitiveness and the country stability in first place the have to referer to some parameters for governability given by de World Bank, so on.
I worked for an American company, which in its heyday was a leader in its field. It was taken over by another American company and two years later was also acquired in an M&A exercise by yet another American company... what does that say? I leave readers to judge...
это говорит о том, что слияния и поглощения - это непрерывный объективный интеграционный процесс,обусловленный действием центробежных сил, конечно влияние оказывает и политика государственного контроля за процессами слияний и поглощений. На эту тему в Теории отраслевых рынков есть исследования Шеррера и Росса!
I was hoping my answer would trigger some response... but sadly there was none. I therefore add a few more lines.
M&A occurs because of several reasons. Let us call the acquirer company the predator and the acquired company the prey. Thus, in the above example, my company ( I did not own it to be clear but worked for it) was the prey The company that acquired got the prey rather cheaply, at least at 1/9 of its price in its heyday. The prey had brilliant engineers, who just left after the acquisition. The benefits the predator expected was probably not realized, I would imagine, following the departure on a huge scale of human intellectual capital (IC) that the engineers possessed in their heads ( call it tacit knowledge). Of course there were differences in company culture, management culture as also geographical location differences. I can think of a large number of factors responsible for lack of success of the predator. Sometimes competitive position does improve but not often enough, in my view... only beneficiaries appear to be the senior management of the acquirer companies who soon try to "re-structure" and lay-off workers which in its turn leads low morale, lower productivity, etc., etc.
I too left at the earliest opportunity despite being promoted and became an academic.. What I am reporting here is thus true life experience, not some vague or nebulous theory of the kind spun by ivory-tower academics based on a limited number of factors.
Anyone reading this comment should perhaps consider trying to research the effect of loss of IC on the performance of the predator, post-M&A. If there is anyone out there interested in undertaking such a study, I would be happy to help.
PS: My company had filed hundreds of patents... nobody knows what happened to the patents... please see that as a waste of invaluable resources.
This is an interesting topic to research into. But you cannot research without the cooperation of the people you want to study or the company management approval. Some organisations in developing countries such as Nigeria will not attend to you or even allow you to distribute the questionnaire copies. How would you carry out an authentic research collaboration in a hostile environment where information is at least not 70% hoarded or you are seen as a spy?
- Badges
- Science topic
- Similar topics
- Economics