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and use competencies to improve operations•Goal is to sell company back to market through an IPO•Split up the pieces of a company•Rationale is that the pieces of a company would be worth more separately than in a combined entity•Create synergies with existing businesses of the buyer
Restructuring and Outcomes31DownsizingDownscopingLeveraged BuyoutReduced labor costsReduced debt costsAlternativesShort-Term OutcomesLong-Term OutcomesEmphasis on strategic controlsHigh Debt costsLoss of human capitalLower performanceHigher performanceHigher risk
MNE Growth Strategy: Build/Buy/Ally FrameworkShared Equity, New EntityMulti-year Purchase Agreement (ALLY)Multi-year Distribution Agreement (ALLY)Licensing (ALLY)Cross Licensing (ALLY)Joint Marketing or Manufacturing (ALLY)Joint R&D (ALLY)Joint Venture (ALLY)M&A (BUY)Greenfield Investment (BUY)Resource CommitmentControl
Cisco Systems Decision Criteria Risk LevelSpeed of Expansion RequiredResource AvailabilitySimilarityChange in the EnvironmentMakeLowSlowHighThe SameSlowInternal GrowthBuyLow to ModerateModerateHigh to ModerateHigh SimilarityModerateM&AAllyHigh to ModerateFastModerate to LowDifferentExtensiveAllianceThenIf These Conditions
Top 8 Technology Acquirers (2007-2012)34CompanyGoogleIBMOracleCiscoMSFTVmwareDellHP# Deals8864504048142228Source: Wikipedia
M&A Waves35WaveTime PeriodTypes of M&AFirst Wave1893-1904Horizontal mergers & acquisitionsSecond Wave1919-1929Vertical mergers & acquisitionsThird Wave1955-1970Diversification; birth of conglomeratesFourth Wave1974-1989Hostile takeovers, corporate raiders, leveraged buyoutsFifth Wave1993-2000Mega deals caused by globalization and deregulationSixth Wave2003-2008Mega deals, private equity, shareholder activismSeventh Wave2011-?Mega deals in healthcare, technology, consumer goods, etc.Source: KPMG, “The Seventh Wave of M&A”, , May 31, 2011M&A activity seems to come in waves (six waves since 1800’s)