Mergers and Acquisitions Motive

Overview of different types and objectives of M & A transactions and motives

Thèse de Bachelor , 2013 , 26 Pages

Gestion d'entreprise - Direction d'entreprise, Management, Organisation

Mergers and acquisitions (M & A) are a form of corporate expansion and growth.
They are not the only means of growth for a company, but they are an alternative
to growth by internal or organic capital investments. (Sudarsanam,(1995) p. 1) The first decade of the new millennium was an era of global mega-mergers. Several factors like readily available credit, low interest rates, technological change and global competition fueled M & A activity and in 2007, M & A transactions reached a new record dollar volume worldwide. (DePamphilis,
(2011) p. 13-14)

Mergers and acquisitions are an important means of removing underperforming
managers or companies and transferring resources to where they are most
needed. (DePamphilis, (2011) p. 124) However, there is considerable evidence
that many M & A activities remain unsuccessful. Estimated failure rates are
typically between 60 and 80 percent. (Homburg and Bucerius, (2006) p. 347)

Due to these high failure rates, it seems unreasonable for a company to engage
in an M & A transaction, but still, more and more companies decide to do exactly
that.

Given the high failure rates of mergers and acquisitions, this topic is one that is of high significance and has been extensively researched in the past. This paper aims to collect the most important research that has been done on the topic of M & A motive, structure it and emphasize crucial findings.

The first part of this paper introduces the reader to the world of mergers and
acquisitions. After defining mergers and acquisitions, a brief overview of the
various types and objectives is given. The next part of the paper informs the
reader about the different motives, which may lead executives to engage in
M & A transactions. Because shareholder value is essential to almost all firms, it is drawn upon as a framework to organize M & A motives in this paper. The last chapter of this paper summarizes the most important points and emphasizes
some of the most crucial factors that make M & A transactions successful. This
paper relies on literature study and research and is not empirical.

Content

Figures

Abbreviations

1 Introduction
1.1 Problem Statement
1.2 Objective
1.3 Procedural Method

2 Mergers and Acquisitions
2.1 History of Mergers and Acquisitions
2.2 Definition of Mergers and Acquisitions
2.3 Types of Mergers and Acquisitions
2.4 Objectives of Mergers and Acquisitions

3 Motives for Engaging in M & A Activity
3.1 Planning M & A Activity
3.2 Distinction of M & A Motives by their Effect on Shareholder Value.
3.2.1 Motives that increase Shareholder Value
3.2.1.1 Synergy
3.2.1.2 Economies of Scale or Scope
3.2.1.3 Increased Market Power and Growth
3.2.1.4 Managerial Efficiency
3.2.2 Motives that decrease Shareholder Value
3.2.2.1 Managerial Hubris
3.2.2.2 Agency Problems
3.2.2.3 Free Cash Flow Theory
3.2.3 Motives with uncertain impact on Shareholder Value

4 Summary and How to Make M & A Transactions Successful

References

• Université: Management Center Innsbruck
• Auteur: Markus Hoffmann (Auteur)
• Année de publication: 2013
• Pages: 26
• N° de catalogue: V210976
• ISBN (ebook): 9783656391807
• ISBN (Livre): 9783656392378
• Langue: anglais
• mots-clé: Mergers, Acquisitions, M&A, Motive, Mergers and Acquisitions, History, Definition, Types, Objectives, Synergy, Shareholder, Value, Shareholder Value, Agency Problems, Managerial Hubris, Managerial, Hubris, Economies of Scale, Economies of Scope, Economies, Scale, Scope