• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Mergers and Takeovers

Extracts from this document...


´╗┐What makes a merger and takeover successful? Research indicates that 65% of mergers and takeovers fail to benefit shareholders. The other 35% of mergers and takeovers are successful. A merger is the combining of two or more companies and is usually mutual between both firms. A takeover is when a company purchases a majority interest in another company; these can either be friendly or un-friendly. M&T?s usually occur when two companies believe a synergist can be made, this means that both companies believe that by coming together they are worth more and are able to gain a bigger advantage than by themselves. More reasons why companies want to come together would be economies of scale, this could be by getting rid of duplicate departments. Some companies may use this as an alternative to hiring as there will be employees already trained and ready to work. An example of a successful M&T would be Morrison?s takeover of Safeway. An example of an unsuccessful takeover would be when G4S tried to takeover Danish competitor ISS. ...read more.


When an M&T is occurring there needs to be good communication between employees as if there is no communication this will cause speculation between the employees and therefore loss of trust in management teams, also un-motivated staff thinking that they are going to lose their job, this can lead to a decrease in turnover. Overall when two companies come together there is a culture clash and different people and companies do things different ways and they cannot come to an agreement or when they do a grudge is still held. All of these reasons above will lead towards an unsuccessful merger or takeover and this can therefore affect the benefits to the shareholder. This is because all of those reasons above effect the value of the synergy the companies have together and they do not reach expectations therefore decreasing the values of the shares that shareholders have. The other 35% of M&T are successful and there are certain reasons for this. A successful M&T has a new entity about the company. ...read more.


As M&T?s are often rare, unique events the successful companies will learn as they go and make changes fast. As these things don?t happen often a company needs to keep track of everything that is happening and what is and is not working and if something is not working they need to change it fast to keep everything moving smoothly and both parties happy. In conclusion only a few M&T?s are successful because they are so rare for some companies and they have no past experiences to work off. Those that are follow certain steps to an extent. They base the M&T on an increase on revenue, they resolve power and people issues quickly, start to integrate with the other company as soon as the deal is agreed, commit to a new different culture, over-communicate so that no one is in the dark to any situations and set out a plan for the synergy to achieve. Doing most of these steps will lead to a successful M&T, however there can be luck involved with these sort of deals along with missing out key steps this shows how complicated a successful M&T can be and how only 35% of them actually succeed. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Business Studies section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Business Studies essays

  1. The Outsiders Novel Essay

    This quote also emphasizes Ponyboy?s stance concerning Darrell ?It was my house as much as Darry?s, and if he wanted to pretend I wasn't alive, that was just fine with me?(1). Thus it is bluntly discernable that Ponyboy does not comprehend why Darrell relentlessly treats him austerely and that is

  2. How Government Spending Could Affect A Tile Business.

    amount of tax free allowance received in which then AL-MURAD can have an increase in their profit margin. UK Interest rates lowered to 0.5%- The bank of England has cut interest rates to 0.5%- a fresh all-time low-and says it will now boost the money supply to help revive the economy.

  1. Discuss how travel factors affect travel to three selected destinations

    Extreme climatic conditions, such as monsoons, hurricanes, tsunamis and tropical storms, can have devastating effects on long haul destinations and appear to be more frequent nowadays. Therefore, visitors are likely to avoid making bookings to long haul destinations that are experiencing adverse weather conditions or cancel their trips when climatic conditions deteriorate.

  2. To what extent does the use of a business plan guarantee success?

    However a lot of people may get so discouraged by what is revealed in the business plan they give up before they even give you a chance. Investing resources unwisely Many business plans fail because those involved do not spend the time or energy, or have the expertise, necessary to make the plan comprehensive enough to have true value.

  1. What are the Functions of Management?

    Organisational structure helps in putting right men on right jobs which can be done by selecting people for various departments according to their qualifications, skills and experience. This is helping in defining the jobs properly which clarifies the rule of every person.

  2. Human Resources Management at Bolton College.

    A person specification uses in Bolton College contains the information that might be ideal for the job. It lists what is needed for the job. It allows possible employees to see whether they are suitable for the job and saving time in taking out anybody who isn?t.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work