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Create a 6 pages page paper that discusses reaching win-win for all stakeholders by merger and acquisitions.
Create a 6 pages page paper that discusses reaching win-win for all stakeholders by merger and acquisitions. Some companies purposely enter into M & A through buying, selling, or combining their businesses with another company. In most cases, M & A is done to ease their financial difficulties or to expand their businesses to enable them to grab more of the local or global market shares. On top of these, M & A can also be considered as a good strategic decision when a company decides to enter new markets, acquire technologies, for tax shield purposes, utilizing surplus funds, or to integrate the business vertically.
Based on a survey study that was conducted in the past, approximately 83% of the responders agree that entering into M & A could become unsuccessful when it comes to generating business benefits related to the shareholder value (Kelly, Cook, & Spitzer, 1999). Since shareholders of merged or acquired companies belong to two or more different companies, internal problems associated with M & A is likely to occur. Aside from the serious management problems that may arise due to the cultural differences of the stakeholders, balancing the potential wealth between the bidder firms and the target firms is very difficult to attain.
About the “win-win” event for the shareholders of both the bidder firm and the target firm, this report will explain the reasons behind the potential wealth effects of entering into M & A on the shareholders of the bidder firm as well as the target firm. Upon identifying and discussing the factors that can trigger the different effects of M & A between the two groups, some recommendations that could promote a “win-win” situation for both groups will be provided.
In a well-managed deal-making of M & A, both the bidder and the target firms can benefit from this transaction. The bidder can enjoy potential wealth through economies of scale, by grabbing a bigger market share and increase the market value of the company (Massoudi, 2006, p.197. Gugler & Mueller, 2003).
