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.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Problem Statement
- Objective
- Procedural Method
- Mergers and Acquisitions
- History of Mergers and Acquisitions
- Definition of Mergers and Acquisitions
- Types of Mergers and Acquisitions
- Objectives of Mergers and Acquisitions
- Motives for Engaging in M & A Activity
- Planning M & A Activity
- Distinction of M & A Motives by their Effect on Shareholder Value
- Motives that increase Shareholder Value
- Synergy
- Economies of Scale or Scope
- Increased Market Power and Growth
- Managerial Efficiency
- Motives that decrease Shareholder Value
- Managerial Hubris
- Agency Problems
- Free Cash Flow Theory
- Motives with uncertain impact on Shareholder Value
- Summary and How to Make M & A Transactions Successful
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This paper aims to provide a comprehensive overview of mergers and acquisitions (M&A) transactions. It explores the different types and objectives of M&A transactions, analyzing the motives that drive companies to engage in such activities. The paper also delves into the impact of these motives on shareholder value, examining both positive and negative outcomes.- Types and objectives of M&A transactions
- Motives for engaging in M&A activity
- Impact of M&A motives on shareholder value
- Success factors for M&A transactions
- Historical trends and global M&A activity
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: This chapter introduces the topic of mergers and acquisitions as a form of corporate expansion and growth, highlighting their significance in the global economy. It also underscores the high failure rates of M&A activities, posing the question of why companies continue to pursue them.
- Mergers and Acquisitions: This chapter provides a historical overview of M&A transactions, defining their different forms and outlining their objectives. It explores the various types of mergers and acquisitions, outlining the different ways companies can combine their operations.
- Motives for Engaging in M & A Activity: This chapter examines the primary motives that drive companies to engage in M&A activity. It categorizes these motives based on their effect on shareholder value, exploring motives that increase shareholder value, motives that decrease shareholder value, and those with uncertain impact.
- Summary and How to Make M & A Transactions Successful: This chapter summarizes the key findings of the paper, highlighting the importance of understanding the motives behind M&A activity and the factors that contribute to their success. It provides practical insights for companies seeking to engage in M&A transactions, emphasizing the importance of careful planning and execution.
Schlüsselwörter (Keywords)
This paper focuses on the key concepts and themes related to mergers and acquisitions, specifically exploring motives, shareholder value, and success factors. It delves into themes of corporate expansion, growth strategies, and the impact of M&A activity on the global economy. Important topics include synergy, economies of scale and scope, increased market power, managerial efficiency, managerial hubris, agency problems, and free cash flow theory.- Quote paper
- Markus Hoffmann (Author), 2013, Mergers and Acquisitions Motive, Munich, GRIN Verlag, https://www.grin.com/document/210976
