This report aims at analysing the implications of changes in European Corporate Law on cross-border mergers, with particular focus on strategic management’s decision on intangible assets of the integration stage. It consists of two parts, (1) an analysis of the implications of changes in European Corporate Law, and (2) an assessment of their impact on post merger integration. Part 1 is about the European Court of Justice’s jurisdiction and its implications on German Corporate Law: It explores how European Law is influencing and thereby changing national law. Having analysed the effect of its rulings on – until recently in continental Europe prevailing – seat theory, I carefully analyse the subsequent developments and trends, including reform of the German Limited Liability Company Act (MoMiG), competition of legal forms, opportunities offered by recently introduced supranational legal forms with particular focus on the Societas Europaea, and EU merger directive with its influence on the German Transformation Act. Part 2 not only critically evaluates prevailing merger integration theories, it also reflects on the opportunities the afore-mentioned changes in European Corporate Law offer to successful post merger integration. Hence, I analyse and further develop Jansen’s 7c model and educe a strategic plan.
Table of Contents
I. Introduction
II. Changes In European Corporate Law: An Opportunity For Successful Post Merger Integration?
1. M&A Foundations
1.1 Overview On The M&A Market
1.2 Types Of M&A Deals
1.3 The M&A Process
2. European Corporate Law
2.1 Theoretical Foundations: Analysis And Critical Evaluation
2.1.1 Characteristic Aspects Of German Law
2.1.2 The Relationship Between European Law And National Law
2.1.3 Recognition Of Companies With Foreign Legal Form
2.1.3.1 The Impact Of The ECJ’s Jurisdiction On The Application Of Seat Theory
2.1.3.2 Consequences: Competition Of Legal Forms And German “MoMiG”
2.1.4 The Opportunities Of Supranational Legal Forms
2.1.4.1 SE Societas Europaea
2.1.4.2 Other
2.1.5 The Right To Change The Legal Structure
2.1.5.1 The EU Cross-Border Mergers Directive: Legal Development
2.1.5.2 Germany: New Options For Corporations
2.1.5.3 Transformation Act: Forms To Change The Legal Structure
2.1.6 Trends And Prospects
2.2 Applying Theory To Practice: Exemplification
2.3 Findings: Implications On Post Merger Integration
3. Post Merger Integration
3.1 Theoretical Foundations: Analysis And Critical Evaluation
3.1.1 Classification Of The Context
3.1.2 Definitions And Forms
3.1.3 Jansen’s 7c Model Of Integration
3.1.3.1 C1: Coordination Of Integration
3.1.3.2 C2: Culture
3.1.3.3 C3: Customers And Suppliers
3.1.3.4 C4: Communication
3.1.3.5 C5: Core Employees
3.1.3.6 C6: Core Competency And Know-How
3.1.3.7 C7: Control And Audit
3.1.3.8 Correlation To The Changes In European Corporate Law
3.1.3.9 Critical Appraisal And Further Development
3.1.4 Trends And Prospects
3.2 Applying Theory To Practice: A Strategic Plan
3.3 Findings
III. Conclusion And Prospects
Research Objectives and Key Topics
This thesis examines the impact of evolving European Corporate Law on the success of cross-border mergers, specifically within the German automotive industry, with a focus on leveraging intangible assets during the post-merger integration phase.
- Impact of European Court of Justice rulings on national corporate structures.
- Strategic utilization of supranational legal forms like the Societas Europaea (SE).
- Development and application of an integration model for intangible assets.
- Analysis of the German Limited Liability Company Act (MoMiG) in a European context.
- Synthesis of a strategic planning framework for post-merger integration.
Excerpt from the Book
2.1.3.1 The Impact Of The ECJ’s Jurisdiction On The Application Of Seat Theory
In international Corporate Law, two major opposing theories exist regarding the assessment of foreign and domestic companies, namely seat theory and incorporation theory. This assessment is of major importance, as the impact of relocating to or from another EU member state varies significantly among the theories. In a series of verdicts (Daily Mail, Centros, Überseering, Inspire Art, Sevic, Cartesio) the ECJ’s jurisdiction has influenced and changed national law and could even further restrict national Corporate Law and thus the application of seat theory in terms of expatriation of companies, pursuant §§52, 58 EC Treaty regarding the European Union right to freedom of establishment. The following section explores whether there is still room for an application of the so-called seat theory under German Law.
Seat Theory. According to the seat theory, the company’s rules and regulations are determined by the company’s domicile. It is crucial that not only the company’s statutory domicile but also the actual domicile, i.e. the headquarters, is located within the state of domicile’s territory. Prior to the ECJ’s jurisdictions, companies founded in Germany who transferred their actual domicile abroad have become a legal company abroad and thus the German company had to be closed. In turn, companies founded outside Germany with an actual domicile in Germany have not been fully recognised in Germany in terms of their legal capacity and, thus, had to form a German corporation first to have legal capacity (Hirte H & Bücker T, 2005:RN 1). Even though the seat theory has certain advantages in regard to the impatriation of companies such as federal control and protection of creditor concerns, the regulation to close a company in times of expatriation is seen as a disadvantage.
Incorporation Theory. By contrast, the incorporation theory has been prevailing in countries other than continental Europe, such as the UK, Denmark or the Netherlands. Pursuant this theory, the country where the company has been founded determines its statute. This means that companies founded in the UK have been allowed to transfer their actual domicile abroad without having to close their British company, and companies founded outside the UK with an actual domicile in the UK have been fully recognised in terms of their legal capacity.
Summary of Chapters
M&A Foundations: Provides a foundational overview of the global M&A market, various deal types, and the three core stages of the M&A process.
European Corporate Law: Analyzes the theoretical foundations of European and German corporate law, the influence of ECJ jurisdiction, the emergence of supranational legal forms, and the right to alter legal structures.
Post Merger Integration: Evaluates contemporary integration theories, develops the 7c model of integration into an 8c model, and presents a strategic plan for managing successful post-merger transitions.
Conclusion And Prospects: Summarizes the findings regarding legal harmonization and its implications, reaffirming the importance of leadership and strategic flexibility in merger success.
Keywords
Mergers & Acquisitions, Germany, automotive industry, European Corporate Law, post merger integration, intangible assets, Sevic, Cartesio, race to the bottom, MoMiG, SE, SPE, Transformation Act, 7c model, strategic plan
Frequently Asked Questions
What is the primary focus of this master thesis?
The thesis focuses on how changes in European Corporate Law create opportunities for more successful post-merger integration, specifically analyzing the German automotive industry.
What are the central thematic areas covered in this work?
The work covers M&A foundations, the shift from seat theory to incorporation theory, the role of supranational legal forms like the SE, and the management of intangible assets during integration.
What is the primary research objective?
The goal is to provide automotive companies with a strategic framework to increase the success rate of M&A by better managing the post-merger integration stage, particularly regarding non-tangible assets.
Which scientific methodology is applied?
The paper utilizes a detailed analysis and critical evaluation of existing legal theory and integration models, combined with an application of these theories to real-world examples like the Opel/Vauxhall and Schaeffler/Continental cases.
What topics are discussed in the main part of the thesis?
The main part analyzes the M&A process, the European legal environment, supranational corporate forms, the German Transformation Act, and the development of the 7c/8c integration models.
Which keywords characterize the work?
Key terms include M&A, automotive industry, European Corporate Law, post-merger integration, intangible assets, MoMiG, and the 8c model of integration.
How does the MoMiG reform affect German companies?
The MoMiG reform modernizes the German Limited Liability Company Act, simplifying the foundation process and, crucially, moving away from strict seat theory, allowing for the transfer of actual domicile abroad.
What is the significance of the 8c model developed by the author?
The author extends Jansen's 7c model by adding "charismatic leadership," arguing that professional, leadership-driven execution is a decisive component for navigating the first 100 days of an integration.
Why is the "merger syndrome" relevant to this analysis?
The merger syndrome describes the emotional stress and fear experienced by employees during a merger; understanding and mitigating this via communication is identified as vital for preserving intangible assets like knowledge and commitment.
- Quote paper
- Manuela Schweizer (Author), 2009, Changes In European Corporate Law - An Opportunity For Successful Post Merger Integration?, Munich, GRIN Verlag, https://www.grin.com/document/133078
