Today, companies need to constantly expand their business to stay ahead of the severe
competition. As competition grows more intense, it makes sense to join forces or simply
acquire the rival to provide the most diverse service and to reach even the last customer.
But is it really only about the need for efficiency to merge and acquire competitors? Are
managers and investors right about their hope, that every new acquisition or merger offers
more control over the market? Or are they themselves pushed into these promising expectations?
This research focuses on how social behavior influences value creation in mergers and
acquisitions. Throughout history, waves have been observed that reflect the excessive hype
for perennial need of growth. Growth by acquisitions and mergers is seen as key element to
create value by investors and managers. However, reality looks different. This research
focuses on a two step approach by first describing underlying social catalysts that amplify
the trend towards value creation in mergers and acquisitions. Secondly, to verify the investigation
of social behavior, the results are matched to a financial approach to detect whether
the transaction price justifies the current value and possible synergies or whether value
is destroyed.
A case study was conducted of Boss Media AB, a software company situated in the online
gaming industry, which experienced several mergers and acquisitions since their foundations
and was eventually acquired itself. The company provided an interview and further
information on their involvement with mergers and acquisitions.
The research showed that mergers and acquisitions continue to increase in number and
value, leading to the amplitude of each wave being higher than the previous one. This also
means that more value is destroyed. It is illustrated that managers being determined to have
bet on the right horse, are often more influenced by social behavior and trends than they
think they are. Blinded by the overestimation of their own abilities, and prosperous shortterm
profits, managers overvalue their investment choices. Hence, the research implies that
managers destroy shareholder value even though they initially intended to create it.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Background
- Problem discussion
- Research question
- Purpose
- Delimitation
- Theoretical Framework
- Theory on Mergers & Acquisitions
- Mergers
- Horizontal Mergers
- Vertical Mergers
- Conglomerate Mergers
- Acquisitions
- Hostile Acquisitions
- Friendly Acquisitions
- Mergers
- Trends in Mergers & Acquisitions
- Mergers & Acquisitions as a Trend in history
- The first M&A wave
- The second M&A wave
- The third M&A wave
- The fourth M&A wave
- The fifth M&A wave
- Recent and current trends
- Behavioral Catalysts in Mergers & Acquisitions
- Hubris
- Managerialism
- Herding
- Mergers & Acquisitions as a Trend in history
- Value creation in Mergers & Acquisitions
- The discounted cash flow model
- Theory on Mergers & Acquisitions
- Methodology
- Research design
- Sample
- Data collection
- Realization
- Interviews
- Statistical ascertainment
- Operationalization
- Realization
- Research quality
- Validity
- Reliability
- Source criticism
- Literature
- Interviews
- Statistical Ascertainment
- Research design
- Empirical investigation
- The Case Study - Boss Media AB
- Industry background - the online gaming industry
- Company background - Boss Media AB
- Revelations from the empirical data
- Revelations from the interviews and statistical ascertainment
- M&As
- Hubris
- Managerialism
- Herding
- Value creation in M&As
- Value estimation of M&As
- Overpricing
- Revelations from the interviews and statistical ascertainment
- The Case Study - Boss Media AB
- Analysis
- Mergers & Acquisitions - a trend caused by social behavior?
- Mergers & Acquisitions – sustainable value creation?
- Evaluating Boss Media AB - the discounted cash flow model
- Step I-entering historical data
- Step II-deriving net working capital
- Step III - projecting future data
- Step IV - calculating free cash flows
- Step V-estimating the WACC
- Step VI - estimating PV, determining valuation and terminal value
- Step VII - determining equity value
- Step VIII-sensitivity analysis
- Results from the evaluation of Boss Media AB
- Evaluating Boss Media AB - the discounted cash flow model
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This research investigates the influence of social behavior on value creation in mergers and acquisitions. The study aims to analyze the driving forces behind the trend of mergers and acquisitions and examine whether this trend leads to sustainable value creation or merely perpetuates a cyclical pattern of overvaluation and value destruction.
- Social behavior and its impact on mergers and acquisitions
- Value creation in mergers and acquisitions
- The role of managerial biases and herd behavior in decision-making
- The cyclical nature of mergers and acquisitions trends
- The relationship between short-term profits and long-term value creation
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: This chapter sets the stage for the research by outlining the background, problem discussion, research question, purpose, and delimitation of the study. The focus is on the growing trend of mergers and acquisitions and the associated questions surrounding their potential to create sustainable value.
- Theoretical Framework: This chapter provides a comprehensive overview of relevant theories related to mergers and acquisitions, including different types of mergers and acquisitions, trends in their historical development, and key behavioral catalysts that influence decision-making in these contexts.
- Methodology: This chapter details the research design, data collection methods, and considerations for research quality. The study utilizes a case study approach, focusing on Boss Media AB, a software company within the online gaming industry that has experienced multiple mergers and acquisitions.
- Empirical Investigation: This chapter presents the findings from the empirical data collected through interviews with Boss Media AB representatives and statistical analysis. Key insights include the role of social behavior, such as managerialism, hubris, and herding, in driving mergers and acquisitions decisions.
- Analysis: This chapter analyzes the collected data to determine the relationship between social behavior and value creation in mergers and acquisitions. It examines the case of Boss Media AB through a discounted cash flow model to assess the potential for value creation and evaluate the effectiveness of the company's mergers and acquisitions strategy.
Schlüsselwörter (Keywords)
This research focuses on the impact of social behavior, including managerialism, hubris, and herding, on value creation in mergers and acquisitions. Key concepts include the cyclical nature of mergers and acquisitions trends, the relationship between short-term profits and long-term value creation, and the use of the discounted cash flow model to evaluate the potential for value creation. The research examines the case of Boss Media AB, a software company in the online gaming industry, to illustrate the practical implications of these concepts.
- Citar trabajo
- Anna Lena Bischoff (Autor), Linn Sällström (Autor), Jesco A. Danylow (Autor), 2011, Mergers & Acquisitions, Múnich, GRIN Verlag, https://www.grin.com/document/173333
