Advantages And Disadvantages Of Mergers And Acquisitions Pdf

  • and pdf
  • Sunday, May 16, 2021 1:10:52 PM
  • 2 comment
advantages and disadvantages of mergers and acquisitions pdf

File Name: advantages and disadvantages of mergers and acquisitions .zip
Size: 1401Kb
Published: 16.05.2021

There are many good reasons for growing your business through an acquisition or merger. These include:.

Benefits of a Merger or Acquisition

So what is the impact of all these mergers? A financial merger or acquisition is pursued, as the name implies, for financial reasons—often to pick up some quick cash or as an investment. Strategic mergers and acquisitions offer a solution to a different business problem. Perhaps the acquirer is looking to grab a new product line, add some additional facilities, enter a new market, or gain expertise and intellectual property.

The bottom line is a strategic merger yields value for both the acquired and the acquiring firm. A few years back we were researching firms that received unusually high valuations. One caught my attention. It was a smaller firm that specialized in top-secret work and had deep experience and contacts in one of the intelligence agencies. This firm was sold for an eye-popping times revenue. When we asked the acquiring firm about why they were willing to pay such sums, their reasons were perfectly clear.

The target firm offered must-have qualifications and contracts with a must-have client. To not have these capabilities would put the acquiring firm at a significant disadvantage when competing for upcoming work. In short, they believed the long-term value for the acquiring firm was much greater than the inflated purchase price.

But when is it advantageous to proceed with an aggressive growth strategy of mergers and acquisitions, rather rely on disciplined organic growth? Mergers and acquisitions make perfect sense in a variety of situations.

For example, maybe an opportunity presents itself that requires fast, decisive action. Or maybe a competitive threat compels a defensive move to get bigger, faster. Here are five situations in which mergers and acquisitions have proven useful as a growth strategy :. It is a prime opportunity for a strategic merger. Companies quickly realized they would be sidelined without the skills and experience necessary to meet the new security demand.

The firms with the requisite experience and relevant client lists suddenly found themselves strategically valuable and highly sought-after acquisition targets. Many industries are seeing an acute shortage of experienced professional staff. Cybersecurity, accounting, and engineering are just a few examples that immediately come to mind. The reality is, intellectual property IP is the new currency of modern business.

Once squirreled away and carefully guarded, IP is now actively bought and sold. For many companies, the acquisition of a firm and its IP is the quickest path to market dominance—or at least a roadblock to competitive incursions. A strategic merger, if done as part of a thoughtful growth strategy, can result in synergies that offer real value for both the acquired and the acquiring. Cost synergies are all about cutting costs by taking advantage of overlapping operations or resources and consolidating them in one entity.

But cost synergies can also result in an increase in buying and negotiating power thanks to the larger combined budget. Revenue synergies alter the competitive balance of power and create opportunities to change market dynamics, sell more products, or raise prices.

Companies can take advantage of revenue synergies and make more money in many ways, including the following:. Many professional services firms are based on a billable-hours business model, but that is certainly not the only option.

Some firms generate revenue as a fixed fee or through performance incentives. Others may employ subscription models popular in the software industry. A merger may also offer a new type of service, such as brokerage, insurance or money management.

That way you avoid possible missteps from inexperience. It might be easier and more cost-effective to simply acquire the capability. Not only is this a practical and smart shortcut to the sought-after service and expertise, you also acquire a built-in customer base and target audience. But not everyone succeeds when mergers and acquisitions are part of the overall growth strategy.

Sometimes a solid strategy is derailed by problems in implementation or flaws in the logic or reasoning behind the strategy. Different firms have different cultures. No surprise there. But the difference in cultures can be problematic.

You can guard against this by being clear about the culture you want and using all tools at your disposal to ensure you achieve it. For example, education, the right incentives, and a focus on your employee brand are most helpful when looking at a possible merging of corporate cultures. Avoid mergers when the features—and benefits—that make one firm valuable are not relevant to the other brand.

Rather than add critical assets, capabilities or value, the acquired or merged firm dilutes the brand and competitive advantage. A merger should be the result of carefully researched brand analysis. It should NOT be an ego-driven trophy deal. Mergers and post-merger integrations are resource-intensive activities that usually involve some of the most senior people in the firm.

If they are not prepared for it, they can easily be distracted by other critical, but less urgent activities. The potential for distraction is greatest—and most profound—after the deal is done and the focus moves to integration.

If senior management gets too distracted, and you risk having the merger flounder as well as damaging the underlying business. The acquisition seems very strategic. The result is a confused marketplace. The whole confusing mess could be avoided with a solid, research-based plan to position the merged brand and help current and potential customers understand the rationale and benefits of the merger. If the marketplace is confused, the strength of your brand will suffer.

After all, brand strength is the product of a simple equation:. Understanding this equation can help you avoid the perils of diminished brand strength. An ill-timed merger can quickly diminish the strength of both the acquiring and acquired brands.

Brand M, which has considerable visibility in the Midwest, wants to expand into the Southeast. To accomplish this, Brand M acquires Brand S, a southeastern-based firm.

But there is a problem. The Midwestern brand is unknown in the southeast, so its overall brand strength is actually diminished by the acquisition. And, when the southeastern firm adopts the brand identity of Brand M, its brand strength is also diminished. Everybody loses. So how do you overcome this problem?

Sometimes a gradual transition to a new brand is the right answer. Watch out for situations where you must change both the focus of the reputation and increase visibility. These are the most challenging mergers. Do your research and understand fully what each firm—the acquired as well as the acquiring—bring to the equation.

It is forward-looking —A good strategy is not just a response to what has been. Where do you really want your firm to go? How will you get there? What needs to happen to do it? It does require buy-in —Senior management must be onboard and embrace what needs to be done. Without management buy-in, any strategy is doomed to failure.

It focuses on implementation —High growth requires careful implementation of every aspect of a business strategy and plan. Follow through with implementation. And consider carefully how the merged firm will generate organic growth.

Research on Changing Consumer Perceptions. Can You Hold My Attention? Where Is the Corrective Upswing? Mergers and acquisitions have become a popular business strategy for companies looking to expand into new markets or territories, gain a competitive edge, or acquire new technologies and skill sets.

So what does a strategic merger look like? Efficient way to acquire talent and intellectual property Many industries are seeing an acute shortage of experienced professional staff. Opportunity to leverage synergies A strategic merger, if done as part of a thoughtful growth strategy, can result in synergies that offer real value for both the acquired and the acquiring.

Companies can take advantage of revenue synergies and make more money in many ways, including the following: Reduce competition Open new territories Access new markets through newly acquired expertise, products, services, or capacity Expand the customer base for cross-selling opportunities Develop sales opportunities by marketing complementary products or services. Add a new business model Many professional services firms are based on a billable-hours business model, but that is certainly not the only option.

Cultural clash Different firms have different cultures. Loss of differentiation Avoid mergers when the features—and benefits—that make one firm valuable are not relevant to the other brand. A major distraction Mergers and post-merger integrations are resource-intensive activities that usually involve some of the most senior people in the firm. Are they no longer an accounting firm? Loss of brand strength If the marketplace is confused, the strength of your brand will suffer.

In the end, a successful high-growth strategy will include the following elements: It is forward-looking —A good strategy is not just a response to what has been.

The Disadvantages of Merging Companies

This is a type of business alliance are used by companies either to diversify or to grow their businesses. Mergers and acquisitions are generally used synonymously; however, as defined above the two combinations are different in subtle ways. In a merger transaction, a new company is formed by two companies. Post-merger, these separately owned firms become a single entity and are jointly owned. Generally, companies of similar sizes undergo the process of merger. Whereas in the case of an acquisition, one company is taken over by another company and in the process, a single owner is established.

This provides a means of expansion or it can remove an obstacle to even greater financial success. Before you make that decision, however, you need to understand the pros and cons of acquiring another company that sells similar products or services that you do. First, an acquisition is the act of buying another business, whereas a merger is a process by which two companies become one company, though the ownership interests may differ. In contrast, mergers often involve a chain of command that gives the leadership of the other company some form of authority or control over how decisions are made. One main advantage of buying another business that sells similar product or services is that you can create economies of scale , which refers to the process of increasing production by lowering production costs. When you take on the second business, you can implement the same marketing and sales strategies for the new company, which lowers costs and helps to boost productivity. Another advantage is that you can broaden your target audience by tapping into the existing market that the company you bought has already attracted.

Starting a business has become rather easy, however, growing it is usually harder once a company has reached a certain point. One of the best ways of growing an existing company is through mergers and acquisitions. It is also worth noting that mergers and acquisitions are regulated in countries all over the globe and they come with many advantages. Many governments offer tax cuts or reductions when a merger or acquisition is completed. Among these, Singapore is one of the best Asian countries where a merger or acquisition could take place in. Opening a business in Singapore by merging or acquiring a smaller existing company can attract substantial tax advantages in this country. One of the greatest struggles a business owner can face is related to entering a new market.


A merger is different from an acquisition. Mergers happen when two or more companies combine to form a new entity, whereas an acquisition is the takeover of.


The Disadvantages of Merging Companies

These include:. However, a merger or acquisition can also create its own problems. See what can go wrong with a merger or acquisition? Breadcrumb Home Guides Buy or sell a business Business acquisitions and mergers Benefits of mergers and acquisitions.

A merger involves two firms combining to form one larger company; it can occur due to a takeover or mutual agreement. When looking at mergers it is important to look at the subject on a case by case basis as each merger has different possible benefits and costs — depending on the industry and firms in question. Network Economies.

Merging two companies can provide the firms with synergies and economies of scale that can lead to greater efficiency and profitability, but it is important to note that mergers can have a downside too. It may be harder for the combined organization to cooperate and communicate, and there's a risk that companies with a too-large market share will eliminate the competition and raise prices for consumers. When two firms merge, it is more than a coming together of two names or brands — it is a real merger of people who bring along a specific corporate culture. If two firms have very different corporate cultures, conflicts can arise.

Pros and Cons of Mergers

So what is the impact of all these mergers? A financial merger or acquisition is pursued, as the name implies, for financial reasons—often to pick up some quick cash or as an investment. Strategic mergers and acquisitions offer a solution to a different business problem.

Не было видно даже кнопочных электронных панелей на дверях кабинетов. Когда ее глаза привыкли к темноте, Сьюзан разглядела, что единственным источником слабого света в шифровалке был открытый люк, из которого исходило заметное красноватое сияние ламп, находившихся в подсобном помещении далеко внизу. Она начала двигаться в направлении люка.

Да и весь мир криптографии изменился. Новые обязанности Сьюзан были засекречены, в том числе и для многих людей в высших эшелонах власти. - Шифры, - задумчиво сказал Беккер - Откуда ты знаешь, с чего начинать. То есть… как ты их вскрываешь.

2 Comments

  1. Brie M. 16.05.2021 at 20:15

    Dairy and gluten free diet plan pdf nigurananda books pdf free download

  2. Kabodine 24.05.2021 at 03:52

    Company will face major difficulties thanks to frictions and internal competition that may occur among the staff of the united companies. There is.

glory and praise to our god chords pdf

Naturalizing phenomenology issues in contemporary phenomenology and cognitive science pdf

Holborn, London, England, ; d. Monnetier, Savoy, France, is well known for her English translations of German hymns; her translations were polished and yet remained close to the original. Educated initially by her mother, she lived with relatives in Dresden, Germany, in , where she acquired her knowledge of German and interest in German hymnody. After residing near Manchester until , she moved to Clifton, near Bristol.