Mergers and Acquisitions Motive
Overview of different types and objectives of M & A transactions and motives
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Bachelor Thesis from the year 2013 in the subject Business economics - Business Management, Corporate Governance, Management Center Innsbruck, language: English, abstract: 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 alternativeto 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...
Bachelor Thesis from the year 2013 in the subject Business economics - Business Management, Corporate Governance, Management Center Innsbruck, language: English, abstract: 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 alternativeto 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 underperformingmanagers or companies and transferring resources to where they are mostneeded. (DePamphilis, (2011) p. 124) However, there is considerable evidencethat many M & A activities remain unsuccessful. Estimated failure rates aretypically between 60 and 80 percent. (Homburg and Bucerius, (2006) p. 347)Due to these high failure rates, it seems unreasonable for a company to engagein an M & A transaction, but still, more and more companies decide to do exactlythat.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 andacquisitions. After defining mergers and acquisitions, a brief overview of thevarious types and objectives is given. The next part of the paper informs thereader about the different motives, which may lead executives to engage inM & A transactions. Because shareholder value is essential to almost all firms, it is drawn upon as a framework to organizeM & A motives in this paper. The last chapter of this paper summarizes the most important points and emphasizessome of the most crucial factors that make M & A transactions successful. Thispaper relies on literature study and research and is not empirical.
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