Mergers And Acquisitions Case Study
What are Mergers and Acquisitions?
Mergers involve the integration of two firms’ operations on a relatively equal basis. Acquisitions involve one firm buying either a controlling portion, or 100% interest, into another firm. This essentially creates new subsidiary business for the controlling firm.
What are Benefits of Mergers and Acquisitions?
Why would a firm decide to enter into a merger or acquisition? There are several reasons including increased market power, overcoming high entry barriers, decreased product development and time, increased diversification, gaining new competitive advantages, and creating new capabilities.
What Problems Could Occur?
While a firm could gain many benefits from a successful merger, managers should managers …show more content…
The support of the larger company enables the products of the smaller firm to reach a larger market. This helps small companies overcome the high entry barriers of certain industries.
Get Skills Or Technologies Faster Or At Lower Cost Than They Can Be Built
Companies choose to buy other companies that have the technologies they need. This allows them to rapidly acquire new technology and avoid common fees and costs associated with creating new technologies. This would create new capacities for the firm and possibly new competitive advantages.
Exploit A Business’s Industry-Specific Scalability
Economies of scale can be valuable for mergers and acquisitions. Managers should choose companies not currently operating at scale, this would increase the ability to gain increased efficiency and profits. So, they should avoid merging with large companies, already operating at scale, since this would provide little new value.
Pick Winners Early And Help Them Develop Their …show more content…
All leaders should be on the same page; they should have the same, clear vision of the firm’s future. If they do not, employees could be confused, discouraged, and disengaged (O’Donnell).
Second, know how to lead change. Changes that occur during mergers or acquisitions can be overwhelming and scary for some employees. Employees are going to have tough questions and critiques. It is important that management answer these questions in an up-front and honest way. Managers should remember employees asking questions care about their jobs and are worrying about their futures.
Third, it is important that managers are given the support they need. As stated earlier, mergers and acquisitions can cause an overwhelming amount of change, and managers will face the brunt of it. They will be under an intense amount of pressure and stress; O’Donnell suggests using executive coaches to help prepare managers are the inevitable
Mergers involve the integration of two firms’ operations on a relatively equal basis. Acquisitions involve one firm buying either a controlling portion, or 100% interest, into another firm. This essentially creates new subsidiary business for the controlling firm.
What are Benefits of Mergers and Acquisitions?
Why would a firm decide to enter into a merger or acquisition? There are several reasons including increased market power, overcoming high entry barriers, decreased product development and time, increased diversification, gaining new competitive advantages, and creating new capabilities.
What Problems Could Occur?
While a firm could gain many benefits from a successful merger, managers should managers …show more content…
The support of the larger company enables the products of the smaller firm to reach a larger market. This helps small companies overcome the high entry barriers of certain industries.
Get Skills Or Technologies Faster Or At Lower Cost Than They Can Be Built
Companies choose to buy other companies that have the technologies they need. This allows them to rapidly acquire new technology and avoid common fees and costs associated with creating new technologies. This would create new capacities for the firm and possibly new competitive advantages.
Exploit A Business’s Industry-Specific Scalability
Economies of scale can be valuable for mergers and acquisitions. Managers should choose companies not currently operating at scale, this would increase the ability to gain increased efficiency and profits. So, they should avoid merging with large companies, already operating at scale, since this would provide little new value.
Pick Winners Early And Help Them Develop Their …show more content…
All leaders should be on the same page; they should have the same, clear vision of the firm’s future. If they do not, employees could be confused, discouraged, and disengaged (O’Donnell).
Second, know how to lead change. Changes that occur during mergers or acquisitions can be overwhelming and scary for some employees. Employees are going to have tough questions and critiques. It is important that management answer these questions in an up-front and honest way. Managers should remember employees asking questions care about their jobs and are worrying about their futures.
Third, it is important that managers are given the support they need. As stated earlier, mergers and acquisitions can cause an overwhelming amount of change, and managers will face the brunt of it. They will be under an intense amount of pressure and stress; O’Donnell suggests using executive coaches to help prepare managers are the inevitable