State of The Art In M&A Theory And Practice
Over the last 100 years, mergers and acquisitions have become more and more important in economic life. As organizations use M&As to secure their positions in an ever more competitive environment, a great deal of research has been conducted. This chap
- PDF / 505,202 Bytes
- 36 Pages / 419.528 x 595.276 pts Page_size
- 58 Downloads / 190 Views
2
7
State of The Art In M&A Theory And Practice
Over the last 100 years, mergers and acquisitions have become more and more important in economic life. As organizations use M&As to secure their positions in an ever more competitive environment, a great deal of research has been conducted. This chapter will give a short introduction to the basic terminologies of M&A. It will furthermore explain the main concepts and theories.
2.1
Mergers and Acquisitions
2.1.1 Definition of the Term "Mergers & Acquisitions" Although M&As play an essential role in economic life and have been increasingly investigated in research, there exists no set definition (Lucks & Meckl, 2002, p. 23). According to Picot, (2000, p. 15) M&As can be understood in a very broad sense. M&As may include a number of different transactions such as concentration of undertakings, sales and purchases of undertakings, cooperation, privatization, alliances, joint ventures, management buy-outs and buy-ins as well as going public (Picot, 2000, p. 15). Other researchers (Haspeslagh & Jemison, 1992, p. 57; Palter & Srinivasan, 2006, p. 19) argue that M&As can be seen as an instrument for managers to make decisions about reallocating resources. In order to avoid ambiguity and misunderstanding, this thesis will define M&A in a narrower sense as follows: x Merger is the combination of one or more corporations with another corporation. Thereby the new combined company legally exists as a new company (Foster Reed, Reed Lajoux, & Nesvold, 2007, p. 3). x
Acquisitions describes the process whereby stocks or assets of a corporation come to be owned by the buyer (Foster Reed et al., 2007, p. 4; Jagersma, 2005, p. 14).
The model developed by Marks ans Mirvis (2001, p. 12) helps to provide a clear understanding about the definition of M&A in a narrow sense, as shown in Figure 2. Organizations can link together in variety of legal combinations. M&As can be seen as one type of strategic combination. These combinations vary in
B. Hauser, Internal and External Context Specificity of Leadership in M&A Integration, BestMasters, DOI 10.1007/978-3-658-08077-8_2, © Springer Fachmedien Wiesbaden 2015
State of The Art In M&A Theory And Practice
their level of investment and their depth of commitment (Marks & Mirvis, 2001, p. 12). Types of Strategic Combinations Licensing
Franchising
Alliance/Partnership
Low
Joint Venture
Investment Control Impact Integration Pain of separation
Merger
Acquisition
High
Figure 2: Types of Strategic Combinations Adopted from: (Marks & Mirvis, 2001, p. 12)
According to Figure 2, mergers and acquisitions ask for a higher degree of integration, investment and control. M&As allow the highest level of integration, but with integration the risk of failure rises (Colombo et al., 2007, p. 202). In addition M&As can be divided into three basic variations: the upstream merger, the down-stream merger and the side-stream merger (Bouchoux, 2009, p. 400). In an up-stream merger the daughter merges with the parent company, which means that the pa
Data Loading...