M&A is a strategic decision, however, not all M&A deals can increase profit and generate outcomes as expected. It may lead to bankruptcy if there are not an effective management strategy and many other problems.
Firstly, M&A does not bring more job, in reverse, due to the changes in structure and organizational system, it will make inappropriate employees lose their jobs. As a result, the unemployment rate increases and the Government has to bear a larger burden.
Secondly, while large companies can leverage their market power many times after M&A, small and weak firms do not. It can be said that M&A creates an unfair environment for small business.
Conflict among major shareholders: after M&A, the consolidated company will increase in both …show more content…
Each company has their own culture and it is used to differentiate them from others. Therefore, when merging two companies together, there will be gaps and conflicts which require the Board of Director find the way to unite these individual cultures into one. If they cannot find the solutions to combine, the consolidated company will not be able to operate smoothly and develop as expected.
In each M&A deal, there are many external and internal factors that contribute to the success of an M&A deal. However, due to some limitations, this research just mentions to some general factors.
Firstly, M&A has to be conducted on the basis of the corporation’s needs for development and the incremental value in which the expansion in market and enrichment in management capability are most important. The result of some researches has indicated that the M&A is one of the most effective strategies to restructure an enterprise to improve the business …show more content…
After deciding, the buy – side identifies its possible target firm from a list of companies based on a number of criteria and considerations made during the due diligence process. Next, it would find out a reasonable price or a range of prices for the target, as well as make decisions in terms of payment, for example, how many percents of the deal will be made in cash, common stock or bonds. In the next step, the manager of the acquiring firm would contact the top management or Board of Directors of the target company to propose the merger deal. They would make some arrangements together on the terms and key issues for the deal, especially the integration in the short term, long term as well as the reorganization of management
Firstly, M&A does not bring more job, in reverse, due to the changes in structure and organizational system, it will make inappropriate employees lose their jobs. As a result, the unemployment rate increases and the Government has to bear a larger burden.
Secondly, while large companies can leverage their market power many times after M&A, small and weak firms do not. It can be said that M&A creates an unfair environment for small business.
Conflict among major shareholders: after M&A, the consolidated company will increase in both …show more content…
Each company has their own culture and it is used to differentiate them from others. Therefore, when merging two companies together, there will be gaps and conflicts which require the Board of Director find the way to unite these individual cultures into one. If they cannot find the solutions to combine, the consolidated company will not be able to operate smoothly and develop as expected.
In each M&A deal, there are many external and internal factors that contribute to the success of an M&A deal. However, due to some limitations, this research just mentions to some general factors.
Firstly, M&A has to be conducted on the basis of the corporation’s needs for development and the incremental value in which the expansion in market and enrichment in management capability are most important. The result of some researches has indicated that the M&A is one of the most effective strategies to restructure an enterprise to improve the business …show more content…
After deciding, the buy – side identifies its possible target firm from a list of companies based on a number of criteria and considerations made during the due diligence process. Next, it would find out a reasonable price or a range of prices for the target, as well as make decisions in terms of payment, for example, how many percents of the deal will be made in cash, common stock or bonds. In the next step, the manager of the acquiring firm would contact the top management or Board of Directors of the target company to propose the merger deal. They would make some arrangements together on the terms and key issues for the deal, especially the integration in the short term, long term as well as the reorganization of management