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

    An incomplete business plan could lead you to invest resources unwisely and cause a financial collapse. Time Coming up with a business plan does nothing to directly sell a product or service. Therefore, many may consider the time it takes to develop a business plan as a big disadvantage, and it could be.

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

    Health in some long haul destinations is also a concern for incoming tourists, particularly in developing countries where HIV and diseases may be common. It is important to have necessary vaccinations before visiting at risk countries and to take heed of the advice for the FCO on health issues while travelling abroad.

  1. 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.

  2. 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

  1. What are the Functions of Management?

    This is very important for job satisfaction. Management also lead to the subordinates in an organisation. Leading is a process of directing or influencing subordinates to achieve organisational goals (Mushipe, 2004). Management provide guidance to employees through establishment of values, ethics and visions.

  2. Human Resources Management at Bolton College.

    It helps employers as well, to see what sort of qualities will be required to do the job. It makes the recruitment process even easier and fairer because it makes sure that the candidates are judged just by the specification.

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