Explore BrainMass
Share

Compare and contrast M&A failures

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Can you help me get started with this assignment?

Prepare a 1,050-1,400-word paper in which you compare and contrast M&A failures.

a. In your paper, discuss the reasons why an M&A fails (technical and legal insolvency, and bankruptcy).
b. Once the failure of an M&A occurs, what happens to the assets of both companies?
In your paper be sure to consider what happens to the:
1) stakeholders,
2) image of the company,
3) price per share,
4) market share, company assets,
5) company position in the industry,
6) goodwill,
7) service capability within the industry.
c. In your paper, be sure to compare and contrast the two to three forms of corporate restructuring. Would you recommend any of the following? Be sure to defend your position:
1) Spin-offs
2) Divestitures
3) Liquidation
4) Carve-out

© BrainMass Inc. brainmass.com December 20, 2018, 2:36 am ad1c9bdddf
https://brainmass.com/business/mergers-and-acquisitions/226430

Solution Preview

a. In your paper, discuss the reasons why an M&A fails (technical and legal insolvency, and bankruptcy).

As per rediff.com, McKinsey reviewed nearly 1,000 global mergers and acquisitions from 1997 to 2006. It compared share prices two days before and two days after each deal was announced. The analysis shows that value created in deals between 2003 and 2006 averaged 6% of the transaction values, whereas those between 1997 and 2000 average less than 2% and though an alarmingly high 58% of all acquiring companies are still overpaying for acquisitions - this is better than the 70% that were doing so in 2000. The most important reason for failure of M&A is failure of leadership, failure of integration, communication failures, and failure to populate the new organization with sufficient talent. (rediff, 2009)
As per bizjournal.com the reasons of merger failures are:
"Technology Integration.
PricewaterhouseCoopers' recently surveyed senior executives from 125 companies worldwide to determine the biggest hurdles of M&A deals and found that integrating information systems is the toughest post-deal challenge. Nearly three out of four companies reported problems integrating information systems after a merger.
Culture Shock.

Mergers are like marriages. The right partner must be selected after an honest and meaningful courtship. There must be communication, flexibility and mutual respect."

I have taken the case of merger of Glaxo with SmithKline. As per wsws.org, "On January 18, 2000 UK pharmaceutical companies Glaxo ...

Solution Summary

Response compare and contrast M&A failures

$2.19