Business Analysis : M & A

The deregulation of the economy has radically altered the business environment in India since 1991. With the changes brought about in the economic policies and the introduction of new institutional mechanisms has provided the corporate sector with huge opportunities to exploit the demands of the huge Indian market. Mergers, acquisitions and amalgamations have become major means of consolidation of the industry. The corporate sector in India currently is finding a sudden rush of Mergers and Acquisitions and has very successfully swept all the industries. Managers nowadays consider amalgamations and takeovers as very powerful weapons in their arsenal and a very essential component in the strategic activities of a well-managed business. The growth being central to the current environment, M&As are gaining increasing acceptance as a mode of inorganic growth.

Mergers and acquisitions have become a growing trend for companies to inorganically grow a business within its particular industry. There are many goals that companies may be looking to achieve by doing this, but the main reason is to guarantee long-term and profitable growth for their business. Companies have to keep up with a rapidly increasing global market and increased competition. With the struggle for competitive advantage becoming stronger and stronger, it is almost essential to achieve these mergers. Through research I will attempt to dissect the best practices for achieving merger success.

The goals of mergers range from reducing the number of competitors, to access of new products (Belcourt et al., p 330). Statistics show that 80% of new product developments fail (Howells, 2011), partly due to challenges and conflicts with human resources functions. Mergers and acquisitions are the fastest way to enter new markets. “It is estimated that 1/3 of all mergers fail due to faulty integration of diverse operations and cultures,” (Chhinzer, 2013). Therefore, the success of a merger or acquisition lies in the ability to guide, motivate, retain, and effectively use

The main objective of M&A by the company is to merge their power and control over the market, and also strengthen company’s competitiveness. Not only that, financial risk also can be reduced. Besides that, by sharing resources and services will results in economies of scale, which producing greater quantity products but at lower cost. As a result, the company can gain value efficiency in new entity because of cost-saving. Furthermore, it is a strategic way to gain quick access to new resources, technologies and capabilities. Therefore, the only way to succeed in executing M&A strategies is by knowing who are the persons involved, how it can be implemented and when the strategies are best implemented. The strategic plan must be done systematically, monitoring progress, evaluating performance and taking corrective action if problem

Mergers and acquisition plays an important role in survival/vitalization of a corporation in today’s market. It continues to be a breakthrough strategy for improving innovation of a company’s product or services, market share, share price etc.

In regards to acquisitions, it is important to distinguish between mergers and acquisitions. In a merger, two companies come together and create a new entity. In an acquisition, one company buys another one and manages it consistent with the acquirer’s needs. An acquisition that involves integration has greater staffing implications than one that involves separation (Rizvi, 2008). A combining of companies is a major change. Mergers and acquisitions represent the end of the gamut of options companies have in combining with each other. It is the mergers and acquisitions that are the combinations that have the greatest implications for size of investment, control, integration requirements, pains of separation, and people management issues

Leadership, Fifth Edition Hughes−Ginnett−Curphy The Art of M & A: Merger/Acquisitions/Buyout Guide, Third Edition Reed−Lajoux

Mergers and acquisitions are a very important part of today’s corporate finance. It is seen as an important tool for the expansion of a company and to further its growth prospects. CEOs of big companies wish to actively participate in M&A processes to turn the enterprises into big conglomerates, thereby achieving profits and gains from the acquired firms in the future. M&A activities however involve a long and complicated procedure of decision-making and this process is fraught with a lot of biases. Empirical evidence has shown that most of the acquiring firms fail to reap the expected profits from M&A activities.

To protect the business from the drastic downfall, many firms chose to take a step by making business combinations. Stepping towards M&A is a winning way to combine to successful alike business. With M&A synergy power of the two companies are combined to crater a business that is most suitable for the demand of the market and its stakeholders. Merger is a case where the acquired company deliberately delivers it assets and liabilities in the hands of the acquiring company. As a result, the company being acquired can survive another phases of competition in business cycle. However, the phenomena of merger and acquisitions of the two businesses would certainly leave an impact on its stakeholders; it may be negative or positive. Due to the financial stress of the company being acquired the stakeholders may feel the off-putting impact and hence it is quite obvious for the stakeholders to be nervous and uneasy at the kick-off of the initial phase of M&A.

Mergers and Acquisitions (M&As) chapter from the textbook (Verbeke 2013), the ideas and theories of M&As are mainly from the research by Ghemawat and Ghadar (2000). Besides, the complementary studies from (Sebenius 1998 and Inkpen 2000), added a different views and theories for M&As process. As these researches were performed back in 1990s and 2000s, therefore it is critical to have literatures update to this particular chapter. The M&As case study regarding Cemex Group will be used as an example for literature updates.

In the vast and voracious business world, attention from media as well as corporations themselves have been predominantly focused on the phenomena that is mergers and acquisitions, undoubtedly due to the sheer volume and frequency of merger and acquisition activity in the past couple of decades. Yet, societies appetite analyzing mergers have been documented as far back as the merger waves of 1898–1902 (Nelson 1959)

The research proposal which is going to be written will mainly revolve around the concept of mergers and acquisition in current situation. Research would mainly focus upon: How mergers and acquisitions take place? Why there is need to merge or acquire? What are the legal ways or step to do that? What parties are involved in mergers and acquisitions? What are the Factors to be considered before mergers and acquisition? In order to carry out whole research till the conclusion few models will be used such as business evaluation models which will comprise asset evaluation method, historical earning evaluation, future maintainable earnings evaluation, relative valuation and future discounted cash flows (DCF). The purpose of choosing the topic “mergers & acquisitions” is its significance in the industry of modern world now days. (Hansell, 2005)

Every merger is demanding on individuals at all levels of the organizations involved (Appelbaum, Gandell, Yortis, Proper, & Francois, 2000; Buiter & Harris, 2013). In addition to the financial perspective, there are many parts that must be managed during a merger, including people and processes (Appelbaum et al., 2000; Buiter & Harris, 2013; Mackenzie &

This article will use a variety of ways for detailed analysis of how Mergers and acquisition affect financial performance, such as use the financial ratio to analysis corporate performance. Then use the PESTEL theory to analysis whether companies can benefit from Mergers and acquisition.

Merger is a process in which to firms can mix their business to perform to a good level or to achieve a goal which either of these firms are not able to achieve alone. Mergers can take place on the same industry as well as in the different industries. It may b horizontal, vertical, conglomerate merger based on the nature of the business and the way the businesses are merging and the relevant and non-relevant industries. Acquisition is a process in which firm basically acquires the operation, management or the complete corporation. Acquisition may be friendly and may b hostile depending on the nature of transaction. Both mergers and acquisition may have impact on the performance of the organization after the occurring of the transaction. Impact may be positive as well as negative on corporate performance based on different factors in different economies.