The Strategy Of Mergers And Acquisition

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2.1 Strategy of Mergers & Acquisition Mergers & Acquisitions refers to corporate reorganisations that transfer an organisation’s ownership from one firm, the target, to the other known as the acquirer (Motis, 2007). The difference between a merger and an acquisition is that the former is a combination of two companies, whereas acquisition is when one company completely takeover another (Gupta, 2013. M&A can benefit companies in various ways and the main advantage is all the potential economies of scale that can arise from the deal (Pettinger, 2012). For example, the firm benefits from cost savings that are associated with marketing and technology. Furthermore, M&A deals provide firms access to a wider customer base and increase their…show more content…
Also, employees can be made redundant as the acquiring company can shut shown under-performing departments (eFinanceManagement, 2015). Section 2 2.1 Mergers & Acquisition in Oil & Gas Industry Organisations see M&A as a fast and efficient way to expand into new markets and incorporate new technologies (Schuler & Jackson, 2001). M&A have a high level of success, nonetheless, failures in an M&A deals are also inevitable. According to Schuler & Jackson (2001), a substantial number of financial and market factors can actually be traced to the negligence of human resource issues and activities. Gupta (2013) mentioned the different motives organisations have for pursuing a merger and acquisition deal are strategic, financial and organisational motives. Conversely, Wheeler et al (2014) go to state the trends for an M&A deal are based on factors such as oil prices, capital availability, oil acquisitions, or strong valuation. And with the current oil price, chief economists at Charles Stanley, Jeremy Batstone-Carr, “warns that further price falls could really start hurting the big firms” (West, 2016), implicating a negative effect on oil companies. Wheeler et al (2014) state M&A activities declined in the industry during 2013, however, the industry has continued to see many deals occur afterwards (Ambrose, 2016). Additionally, as
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