Decide whether the new entity provides the strategic

This preview shows page 3 - 5 out of 7 pages.

Decide whether the new entity provides the strategic and financial expectations that caused the creation - NB to do an investigation if the transaction failed – learn from mistakes - Often neglected - Deals often considered to be so unique that they have no similarities and so cannot aid each other - Other reasons for failure to reflect on outcome include: Lack of centralised and on-going M&A department responsible for learning Experiences are held by the individuals involved more so than recorded Individuals experiences are communicated systematically “the trail has gone cold” – difficult to get details of transaction one new entity is formed Stakeholders in the M&A Process - There are a wide variety of stakeholders involved in the M&A transactions - Vital to get expert opinions to ensure the success of the transaction to avoid affecting so many stakeholders - Each of the following stakeholders has a unique role in the process and thus needs to be considered: 3 | P a g e
Image of page 3

Subscribe to view the full document.

Acquiring Company – bidder Target Company Investment Bankers – assist with the negotiating and deal structuring Attorneys – ensures the transaction meets all the legal requirements of a country Accountants/Valuation Experts – very NB role, conduct the due diligence report - “ the care that a reasonable person should take before entering an agreement or transaction with another party” due diligence - consider the financials as well as the off balance sheet transactions - provide the value for the transaction Environmental Experts Trade Unions – becoming more vocal, protecting “the human element” Governments – the policy maker and law enforcer, B-BBEEE Risk Arbitrageurs - look for price discrepancies, discover a mispriced security an sell at a premium - hear about the potential merger, buy the shares at the lower prices and sell once the price increases after the transaction. - by the shares being purchased, its pushes the price upward - called “risk arbitrageurs” because there’s no guarantee the transaction will succeed Global Merger Waves - Waves all occurred during periods of sustained economic prosperity and rapidly rising stock market levels First Merger Wave: 1897 – 1904 - Mostly in the USA in the mining and manufacturing industries - Predominantly horizontal mergers – created near monopolistic structures - Trend continued despite the legislation to prevent near monopolistic structures - M&A activity was fuelled by economic growth and the economies of scale caused by mass production - Mass production was introduced - Ended with the market crash of 1904 Second Wave: 1916 – 1929 - Stricter enforcement of anti-monopoly legislation formation of oligopolies - Wide spread price fixing in USA – limited competitors in the market, shared the profits - Mainly vertical mergers – same supply chains - M&A activity is motivated by string economic growth after WWI - First use of debt financing - Introduction of mass marketing and mass merchandising -
Image of page 4
Image of page 5
  • Fall '19
  • takeover, Target Company

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes