tailieunhanh - Chapter 10 - Studying Mergers and Acquisitions

Explain the motivations behind acquisitions and show how they’ve changed over time. Explain why mergers and acquisitions are important vehicles of corporate strategy | Chapter 10 Studying Mergers and Acquisitions OBJECTIVES Explain the motivations behind acquisitions and show how they’ve changed over time 1 Explain why mergers and acquisitions are important vehicles of corporate strategy 2 Identify the various types of acquisitions 3 Understand how the pricing of acquisitions affects the realization of synergies 4 Outline the alternative ways to integrate acquisition and explain the implementation process 5 Discuss the characteristics of acquisitions in different industry contexts 6 THE eBAY-PAYPAL ACQUISITION The partnership made sense but would it work? Rely on transaction-based revenue No inventory or warehousing No sales force ? Can we recoup the $250 million premium we paid with savings and revenue growth? MERGER VS. ACQUISITION Merger Acquisition A A B B C A + + The purchase of one firm by another so that ownership transfers The “merger” of Daimler with Chrysler in 1997 is considered by many to have been an acquisition in disguise | Chapter 10 Studying Mergers and Acquisitions OBJECTIVES Explain the motivations behind acquisitions and show how they’ve changed over time 1 Explain why mergers and acquisitions are important vehicles of corporate strategy 2 Identify the various types of acquisitions 3 Understand how the pricing of acquisitions affects the realization of synergies 4 Outline the alternative ways to integrate acquisition and explain the implementation process 5 Discuss the characteristics of acquisitions in different industry contexts 6 THE eBAY-PAYPAL ACQUISITION The partnership made sense but would it work? Rely on transaction-based revenue No inventory or warehousing No sales force ? Can we recoup the $250 million premium we paid with savings and revenue growth? MERGER VS. ACQUISITION Merger Acquisition A A B B C A + + The purchase of one firm by another so that ownership transfers The “merger” of Daimler with Chrysler in 1997 is considered by many to have been an acquisition in disguise The consolidation or combination of one firm with another MOTIVES FOR MERGERS AND ACQUISITIONS Sometimes termed “Managerialism”, manager can conceivably make acquisitions-and even willingly overpay for them-to maximize their own interests at the expense of shareholder wealth Managers may make mis-taken valuation and have unwarranted confidence in their valuation and in their ability to create value because of pride, over-confidence, or arrogance Managers may believe that the value of the firms combined can be greater than the sum of the two independently Reduced threats Increased market power and access Realized cost savings Increased financial strength Sharing and leveraging capabilities Managerial self-interest Hubris Synergy M&A – A VEHICLE THAT IMPACTS ALL ELEMENTS OF THE STRATEGY DIAMOND M&A and the Strategy Diamond While mergers and acquisition are explicitly vehicles of strategy, they have major implications for arenas staging, and economic logic as well Economic logic .