Mergers and Acquisitions

2736 Words Jan 7th, 2018 11 Pages
In dynamic business environments, the value of existing resources is subject to erosion, in some instances fast erosion. Consequently, firms continuously respond to changing environmental conditions by upgrading their resources and capabilities via renewal, acquisition, redeployment, and recombination. Mergers and acquisitions provide firms with a practical tool to close their resource gaps, allowing for a much faster reconfiguration of the product mix toward high-profit products than, for example, internal development (Eschen and Bresser, 2005). The need for corporate firms to achieve competitive advantage in a highly competitive global environment has necessitated the implementation of innovative strategies, one of them being mergers and acquisitions (Rizvi, 2010). Mergers and acquisitions have become an increasingly popular strategy for achieving corporate growth and diversification, with the M&A activity in the 1990's smashing all existing records, both in terms of the number of transactions and the size of the deals. The worldwide value of M&A increased from $462 billion in 1990 to over $3.5 trillion in 2000. Even though this unparalleled wave of M&A drop in the early 2000's as the global economy cooled off and slid into recession, the M&A volume worldwide remains at a much higher level than existed in…

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