M&A REASONS
Abstract
This report looks at mergers and acquisitions globally and considers why so many fail. Despite this scenario, management decision-makers still continue to look for opportunities. This study researches both successful and unsuccessful mergers and acquisitions in order to determine the reasons for both successes and failures. Perhaps, historically mergers have occurred between companies that are similar in size and also have similar interests , yet acquisitions tend to facilitate larger organizations and companies acquiring smaller businesses. It is now common for mergers and acquisitions to be enacted across borders, often providing solutions for corporates to extend their influence from national into international markets. However, despite the financial expertize available to ascertain the viability of such business transactions, many of these business ventures fail, or at best do not perform according to expectation; reflected in adversely affected share prices. This report seeks to understand the motivating factors behind the continuing drive by many boards of directors to pursue this type of business transaction, and how this trend of failures can be reversed.
Introduction
In recent times, global competition and the drive to leverage advantage, has resulted in both small and larger companies combining resources. Consolidations of markets are one of the main reasons for M&A’s. Corporates possessing similar products and services are looking to both consolidate and expand; thereby utilizing joint interests to further their goals. Despite extensive ‘due diligence’ and research, there have been and still are many risks to venture into such business transactions.
Although mergers and acquisitions are motivated by different requirements, the end result is to increase their size and capacity for growth. Due to the increasing development of business systems and ‘know how’ coupled with advances in communication technology, speed of growth and efficiency of
This report looks at mergers and acquisitions globally and considers why so many fail. Despite this scenario, management decision-makers still continue to look for opportunities. This study researches both successful and unsuccessful mergers and acquisitions in order to determine the reasons for both successes and failures. Perhaps, historically mergers have occurred between companies that are similar in size and also have similar interests , yet acquisitions tend to facilitate larger organizations and companies acquiring smaller businesses. It is now common for mergers and acquisitions to be enacted across borders, often providing solutions for corporates to extend their influence from national into international markets. However, despite the financial expertize available to ascertain the viability of such business transactions, many of these business ventures fail, or at best do not perform according to expectation; reflected in adversely affected share prices. This report seeks to understand the motivating factors behind the continuing drive by many boards of directors to pursue this type of business transaction, and how this trend of failures can be reversed.
Introduction
In recent times, global competition and the drive to leverage advantage, has resulted in both small and larger companies combining resources. Consolidations of markets are one of the main reasons for M&A’s. Corporates possessing similar products and services are looking to both consolidate and expand; thereby utilizing joint interests to further their goals. Despite extensive ‘due diligence’ and research, there have been and still are many risks to venture into such business transactions.
Although mergers and acquisitions are motivated by different requirements, the end result is to increase their size and capacity for growth. Due to the increasing development of business systems and ‘know how’ coupled with advances in communication technology, speed of growth and efficiency of