Mergers & Acquisitions
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Mergers & Acquisitions are new & quite confusing to me. I have to write an 1100 word essay which I compare and contrast M&A failures.
a. In the 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 the paper be sure to consider what happens to the stakeholders, image of the company, price per share, market share, company assets, position in the industry, goodwill, and service capability within the industry.
c. In the 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
Please be sure to cite references.
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Mergers & Acquisitions are new & quite confusing to me. I have to write an 1100 word essay which I compare and contrast M&A failures.
When Compaq faced strong competition in the market it acquired Digital that faced equally tough competition, the result was failure. When AT&T acquired NCR there was a mismatch between the cultures and later NCR had to be sold off for a huge loss.
a. In the paper, discuss the reasons why an M&A fails (technical and legal insolvency, and bankruptcy).
There is a host of reasons why Mergers and acquisitions fail. First, there is a technological gap between the two companies. Second, the technological competence of the two companies is entirely different. Third, the research and development levels of the two companies are very different fourth, the technological requirements of the customers of the two companies are different. Fifth, the technological strategy of the merged companies is different. Sixth the technical training of the employees of the two companies is very different. Seventh, the technology used in the manufacturing processes are different and do not match. Eight, the research focus of each of the companies is very different. Ninth, the employees of one company do not recognize the technical expertise of the persons belonging to another company.
Mergers fail because legal due diligence is not carried out. There are mergers that have failed because the acquired company claimed assets on its financial statements that simply did not exist. In addition, companies that have the possibility of being acquired, artificially increase the profits of the company, this can lead to an excessively high price being paid for the company and subsequent bankruptcy. The companies that expect to be acquired increase their net worth artificially, sometimes through account jugglery and this leads to excessive price being paid. Moreover, a large number of mergers and acquisitions fail because there is not integration plan in place to manage the integration. There is a sense of fight and snatch when mergers are implemented. For example, BMW fought off a competitor to get Rover, however, it had no formal integration plan in place. This can be disastrous.
An important reason why mergers and acquisitions fail is that there is no ...
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