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Essay / Research Paper Abstract
It is well known that mergers and acquisitions often fail to increase the wealth of shareholders and realise the potential benefits. This 12 page paper argues that this failure mainly due to the lack of integration planning and a failure to consider human factors such as fear and distrust. The paper considers theory and uses several mergers and acquisitions cases to illustrate the points raised. The bibliography cites 17 sources.
Page Count:
12 pages (~225 words per page)
File: TS14_TEmerfail.rtf
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Unformatted sample text from the term paper:
the ability to maximise resources and greater market share may also be perceived benefits. However, despite the popularity, a great deal of empirical evidence indicates that the perceived benefits are
only realised by a small ministry of the post merger or post acquisition companies. In reality, if success is measured by increased market value or increased profits then between 60%
- 80% of all mergers are financial failures, and roughly 44% of acquired companies will be subsequently sold on at a later date (Tetenbaum, 1999; 22). In the UK it
is assessed that up to 50% of all mergers will fail (Trevail, 1998). This may indicate that in critically evaluating the success of failure of mergers and acquisitions we
are using only a single set of subjective measures. The dominant paradigm does make the assumption that the acquisitions have the target
of increased shareholder returns rather than other goals, such as increased market share, or as a defence strategy as seen in the case of Hewlett Packard and Compaq, but with
shareholders as the primary stakeholder group the financial perspective is one that is valid but not necessarily the correct dominant paradigm that should be used when assessing success or failure,
the student may like to build on this arguing for a corporate wealth maximisation model to be used as an assessment tool. Mergers and acquisition still continue to
be driven by the difficult to attain goals and whilst there ahs been the evidence of some decreases in 2002, 2003 saw increases again, companies do not appear to be
heading the associated difficulties that lead to failures. There was a 26% drop in merger and acquisition activity in 2002 compared to
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