Merger and acquisition failure examples in india
Answers
Reasons for Failure of Mergers and Acquisitions
Though the M&As basically aim at enhancing the shareholders value or wealth, the results of several empirical studies reveal that M&As consistently benefit the target company's shareholders but not the acquirer company shareholders. A majority of corporate mergers fail. Failure occurs on average, in every sense, acquiring firm stock prices likely to reduce when mergers are announced; many acquired companies sold off; and profitability of the acquired company is lower after the merger relative to comparable non-merged firms. Consulting firms have also estimated that from
Abstract
Corporate mergers and acquisitions (M&As) have become popular from corner to corner the world during the last two decades thanks to globalization, liberalization, technological developments and intensely competitive business environment. The synergistic gains from M&As may result from more efficient management, economies of scale, more profitable use of assets, exploitation of market power, the use of complementary resources, etc. Interestingly, the results of many empirical studies show that M&As fails to create value for the shareholders of acquirers. In this article I covered background of merger and acquisition, reasons for failure of merger and acquisition, and impact of merger on shareholders.
Introduction
Mergers and acquisitions are almost a daily occurrence in the life sciences. Competition is fierce, and companies must team up to survive in an industry where specialized knowledge is king. One of the largest, most critical, and most difficult parts of a business merger is the successful integration of the enterprise networks of the merger partners. BPO Systems has the expertise and skills to make your merger or acquisition a much smoother process.
The prime objective of a firm is to grow profitably. The growth can be achieved either through the process of introducing or developing new products or by expanding or enlarging the capacity of existing products. Mergers and Acquisitions (M&As) are quite important forms of external growth. The last decade of 20th century has been substantial increase in both number and volume of M&A activity. In fact, consolidation through M&As has become a major trend across the globe. This wave was driven by globalization, liberalization, technological changes, and market deregulation and liberalization. Almost all industries are going through reorganization and consolidation. M&A activity has been predominant in sectors like steel, aluminum, cement, auto, banking and finance, computer software, pharmaceuticals, consumer durables, food products, agro-chemicals, textiles, etc. Generally M&As aims at achieving greater efficiency, diversification, market power, etc. The synergistic gains by M&A activity accrue from more efficient management, economies of scale and scope, improved production techniques, combination of complementary resources, redeployment of assets to more profitable uses, the exploitation of market power or any number of value enhancing mechanisms that fall under the rubric of corporate synergy. M&As is a indispensable strategic tool for expanding product portfolios, entering new markets, acquiring new technologies and building new generation organization with power and resources to compete on a global basis.
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