10Santikian_FBE 421_sp11_

10Santikian_FBE 421_sp11_ - FBE 421: Financial Analysis...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
FBE 421: Financial Lecture 10 Mergers and Acquisitions
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
What Motivates M&A Activity? Synergies economies of scale other efficiency-related improvements Attempts to create market power forming monopolies or oligopolies less true after introduction of strong anti-trust laws and enforcement Market discipline removal of incompetent target management hostile takeovers of the 1980s Empire-building self-serving attempts by acquirer management to “over-expand” Opportunities for diversification exploiting internal capital markets, managing risk for undiversified  managers prevalent in the 1960s, although many of these mergers were failures
Background image of page 2
Empirical Fact #1 Mergers occur in waves. Empirical Fact #2 Within a wave, mergers strongly cluster by industry. Suggests that mergers might occur as a reaction to  unexpected shocks to industry structure. Intuition: Industries tend to restructure and consolidate in  concentrated periods of time. These changes occur suddenly.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 14

10Santikian_FBE 421_sp11_ - FBE 421: Financial Analysis...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online