Failures of International Mergers and Acquisitions

8716 Words35 Pages
Table of contents Introduction 3 Types of Mergers 3 Types of Acquisitions 4 Motives behind M&A 5 Problems faced in Mergers and Acquisitions 6 Problems faced in Cross Border Mergers and Acquisitions 7 Sony's Acquisition of Columbia Pictures 8 Sony 8 Columbia Pictures 9 Analysis: Star Framework 9 Fig: Choice of Entry Mode 15 Failure of the Acquisition 15 Reasons for the Failure 16 Merger between Daimler-Benz and Chrysler Corporation 18 Daimler-Benz 18 Chrysler Corporation 18 Analysis: Star Framework 19 Reasons for the Merger 22 Failure of the Merger 23 Reasons for failure 23 Culture Clash 23 Mismanagement 25 Literature Review 27 Conclusion 29 Introduction Mergers and acquisitions (M&A) and corporate…show more content…
Another type of acquisition is a reverse merger, a deal that enables a private company to get publicly-listed in a relatively short time period. A reverse merger occurs when a private company that has strong prospects and is eager to raise financing buys a publicly-listed shell company, usually one with no business and limited assets. The private company reverse merges into the public company, and together they become an entirely new public corporation with tradable shares. Regardless of their category or structure, all mergers and acquisitions have one common goal: they are all meant to create synergy that makes the value of the combined companies greater than the sum of the two parts. The success of a merger or acquisition depends on whether this synergy is achieved. Motives behind M&A These motives are considered to add shareholder value: • Economies of scale: This refers to the fact that the combined company can often reduce duplicate departments or operations, lowering the costs of the company relative to theoretically the same revenue stream, thus increasing profit. • Increased revenue/Increased Market Share: This motive assumes that the company will be absorbing a major competitor and thus increase its power (by capturing increased market share) to set prices. • Cross selling: For example, a bank buying a stock broker could then sell its banking products to the stock broker's customers, while the broker can sign up the bank's customers for
Open Document