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By: Caroline Firstbrook

Presented By: Viknesh Kumanan

What are Mergers & Acquisitions?


Mergers
the combination of two or more companies into one new company

or corporation, through a process of negotiation. (Kang & Johansson,


2000)

Acquisitions
the combination of two or more companies into one new company

or corporation, where negotiations do not take place.


(Kang & Johansson, 2000)

Acquisitions can be either: Hostile a take over where shares are acquired from the shareholders at a price that the target company directors do not recommend. (Lassere, 2012) Agreed - target company accepts the offer price for shareholding
(Lassere, 2012)

Transnational M&As
More companies are looking overseas for merger partners or

acquisition targets to meet their organisational growth aspirations


M & As provide organisations with ready made access to

customers, products, brands, distribution channels and market knowledge


Potential revenue growth and cross selling of products provide

opportunities for organisations


Many organisations fail to understand that acquiring and

merging with a company in an unfamiliar market can be risky

Key Drivers of Success in Transnational M&As


1.

Start with a clear and compelling strategy

2. Understand the markets and their environments


3. Convey respect for employees of acquired company 4. Execution, execution, execution

Start with a Clear and Compelling Strategy


Transnational acquirers begin with a clear view how

their acquisitions will affect their overall organisational strategy


Acquiring organisations should pay attention when

selecting acquisitions by making sure they best equipped and are able to meet their standards and roles.
Example: Heineken

Understand the Markets and their Environments


Failure to understand culture, regulatory structure and

competitive environment of M&A company


Over optimisms on revenue growth and cost saving

opportunities
Assumption of customers in new markets are same as

home market
Example: Mercedes-Benz

Convey Respect for Employees of Acquired Company


Employees of acquired company are essential levers for

extracting value in an acquisition as they possess:


Local Market Knowledge Customer and Supplier relationships Technical capabilities and influence

Sensitivity and attention to cultural gaps are important Example: Ben & Jerrys

Execution, execution, execution


Integration planning and execution must begin once a

M&A is finalised
Management should guide the integration process within

both organisations whilst carrying out day to day operations

Critical sources of value such as customer

relationships and distribution channels need to be carefully managed


Example: British Petroleum

Conclusion
Cross border acquisitions are like

potato chips, you rarely want just one Caroline Firstbrook


By creating repeatable processes

and identifying internal experts, subsequent future acquisitions can be closed faster and integrated quicker with a higher chance of success.

References
Kang, N. and S. Johansson (2000), Cross-Border Mergers and Acquisitions: Their Role in Industrial Globalisation, OECD Science, Technology and Industry Working Papers, 2000/01, OECD Publishing.
Lasserre, P. (2012) Global Strategic Management, 3rd ed., Palgrave MacMillan: Hampshire UK. Ch.5. Firstbrook, C. (2007) Transnational mergers and acquisitions: how to beat the odds of disaster, Journal of Business Strategy, 28, 1, 53-56.