Effects on Mergers and Acquisitions on Bank Growth

This paper is about two companies that went through same type of change (merger and acquisition) with different outcomes. Merger is combination of two or more companies in which the assets and liabilities of the selling firms are absorbed by the buying firm. Although the buying firm may be a considerably different organization after the merger, it retains its original identity while Acquisition is the purchase of an asset or an entire company (Sherman, A. J., & Hart, M. A. (2005). Chapter 1: The Basics of Mergers and Acquisitions. In, Mergers & Acquisitions from A to Z. American Management Association International.).

Mergers and takeovers are forms of external growth within a business. External growth occurs when one firm decides to expand by joining together with another. A takeover specifically refers to the gaining control of a firm by acquiring a controlling interest in its shares (51%). Merger, on the other hand, means the joining with another firm to form a new combined enterprise, shares in each firm are exchanged for shares in the other.

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.

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

In this paper, I begin by describing and assessing the different criteria financial analysts within Fortune 500 companies use to evaluate merger success and acquisition rationale. I also discuss what these strategies can imply about the sources of gains and losses on each company’s stock price, and the factors that drive merger success in the long run. I then discuss the firsthand evidence of this merger and acquisition by examining transaction details from both parties and transitioning into an analysis of CB&I’s strategy for post-merger integration. Finally, I discuss the implications of

Industry mergers or business combinations are a phenomenon that has been commonplace for quite some time now. They basically involve two or more organizations coming together to form a large corporate under which they operate. The new organization which may have a combination of the names of the merging components or a totally new name operates as a new entity. The new rule under which the new entity operates depends in the agreement on the terms of the merger. As stated in our advanced accounting text, the history of mergers can be traced back to the 1895 to 1905 period in the US when the

The paper differs from others as it will provide insight and evaluation into which event during the merger process had the largest effect and identify whether this was the same for both firms, especially since the merger was undertaken in a tough regulatory environment which contains many “hurdles” (). The results of this paper could be attributed to other firms in the industry or, potentially, to other industries with similar regulatory structures.

I would like to thank various people to whom I am indebted for assisting me in producing this thesis. I am greatly indebted to Professor Robin Limmack for assisting me with the groundwork for this study. I am greatly indebted to Dr Kevin Campbell, my principal supervisor for his continuous support and guidance throughout the period of study.

Mergers and acquisitions have been prevalent amid companies in the United States for decades. Many believed that merger and acquisition strategies played a critical in the rebuilding of companies domestically three to four decades ago and continue to produce the same benefits today. Merger and acquisitions are used by companies to produce greater worth for stockholders and shareholders. Mergers involve a minimum of two establishments partnering together to form a more effective and efficient company under one umbrella. Acquisitions involve the process in which an establishment buys a controlling or complete interest in another establishment with the goal of making the acquired establishment a subsidiary in its portfolio (Hitt, M. A. 2013).

Azhagaiah & Kumar (2011), in their study tested hypothesis concerning whether there is significant improvement in the corporate performance of Indian manufacturing corporate firms following the merger event using paired t-test. The study findings indicate that Indian corporate firms involved in M&A have achieved an increase in the liquidity position, operating performance, profitability, and reduce financial and operating risk.

Today’s fast growing globalize economies and competition have forced industries to fine ways to survive in today’s perplexed business environment and generate profit for their shareholders. There are many methods to develop the organizations one of them is Mergers and Acquisitions. This is where strategies for success are developed by acquiring new companies or by the merger of two (P.Gaughan, 2000).

This chapter shall provide an introduction of the research and consist of five essential sections. Basically the first three sections will target to elaborate the background of the study, the statement of the problem, and the objectives of the study. However, the rest of the following sections will present the research questions, significant of the study and eventually the structure of the research. Therefore this combination of the sections will offer a comprehensive overview and mental image of the researcher as well the research readers

Many reasons such as globalization, technical developments, changing political relations between countries and liberalization cause a compelling and competitive business environment for the companies. This pressure to remain standing in corporate finance world makes companies to be in quest of rapidly effective ways to gain strenght and expand their business activities. At this point, Mergers and Acquisitions, which are two of the essential activities in capital markets to restructe a corporation or business activities and to achieve economic growth and reinforcement, can be counted as two of the mainstream activities of the today 's business world because of its advantages and immediate effects.

(Fisher, Schoenfeld & Shaw, 1999 p.93) According to Hewitt (2006), most of these activities are likely to be in pursuit of improved market access, combined business creation and coordinated strategies. Increasing number of organizations also sees M&A as a potential way to generate revenue through the sharing of employee talents, technology and ideas. ‘’A recent study on mergers and acquisitions also reveals that fund investors at some 80% of LBO firms enjoyed returns equal or greater than their cost of capital on their M&A acquisitions.’’ (Harvard, 2000) For example, the DBS and POSB merger in 1998 has brought a total cost savings of 17.6 million within operations. Additionally, POSB substantial liquidity had benefited from DBS’ expertise in treasury.( Singh, Pangarkar & Heracleous, 2003 p.221) Despite the attractive business opportunities that M&A activities may bring, the occurrence of a merger or takeover can create a variety of problems for an organization like; demoralized workers due to loss of jobs and other benefits, conflicts due to different cultures and working style in employees, change in cooperate culture and loss of identity and unclear operational and policy changes in employees.( Marks & Mirvis, 2000). Many a times, the failure in an M&A may be due to companies not paying enough attention to the human factor. Although

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.