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Coceptual Framework Of Mergers & Acquisitions-B.V.Raghunandan
 

Coceptual Framework Of Mergers & Acquisitions-B.V.Raghunandan

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An introductory profile of mergers and acquisitions

An introductory profile of mergers and acquisitions

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    Coceptual Framework Of Mergers & Acquisitions-B.V.Raghunandan Coceptual Framework Of Mergers & Acquisitions-B.V.Raghunandan Presentation Transcript

    • Conceptual Framework
    • Mergers, Acquisitions & Corporate Restructuring “Any significant and permanent change in the capital structure of an organisation, long term assets, manufacturing operations, organisation or marketing”
    • Types of MA & CR
      • Mergers/Amalgamation
      • Acquisitions/Take -Over
      • Spin-off
      • LBO
      • Divestiture
      • ESOP
      • Joint Venture
      • Holding Company
      • Split Up
      • Strategic Alliance
      • Sell–off
      • MBO
      • MBI
      • MLP
      • Reverse Merger
      • Equity Carve-out
    • Motives for M & A
      • I Strategic Motive
      • II Financial Motive
      • III Organisational Motive
    • I Strategic Motive
      • Growth
      • Scale of Operations
      • Competition
      • Market Share
      • Acquiring Size
      • Backward Integration
      • Forward Integration
      • Synergy
      • Core Competence
      • Diversification
      • Reduction of Risk
      • Balancing Product Cycle
      • Mgt of Recession
      • Entry into New Markets/New Segment
    • II Financial Motive
      • Investment of Surplus Funds
      • Higher Market Capitalisation
      • Reducing Costs
      • Tax Planning/Tax Benefits
      • Revival of Sick Units
      • Increasing EPS
      • Creation of Shareholder Value
    • III Organisational Motive
      • Entrepreneur’s Personal Compulsions
      • Retention of Management Talents
      • Removal of Inefficient Management
      • Quality of Management
      • Lobby Power
      • Emergence as an MNC
      • Emergence as a Conglomerate
    • Theories of Merger
      • Efficiency Theory
      • Information & Signalling
      • Market Power
      • Tax Considerations
      • Agency Problems & Managerialism
      • Hubris Hypothesis
    • I Efficiency Theories
      • Differential Efficiency Theory
      • Inefficient Management Theory
      • Synergy
      • Pure Diversification
      • Strategic Realignment
      • Undervaluation
    • A. Differential Efficiency Theory
      • Differences in Efficiency
      • Predator Attitude
      • Easeness of Take-over
      • Distress Sale
      • Usage of Surplus Managerial Personnel
    • B. Inefficient Management Theory
      • Poor Valuation
      • Shareholders Support
      • Market & Funding Agencies Support
      • Better Image for Both
    • C. Synergy
      • Value, Premium Paid & Expenses of Merger
      • Financial Synergy
      • -Different Cash flows
      • -Different investment Opportunities
      • -Better Funding Externally
      • Specialised Funding Agencies provide funds
      • Operating Synergy
      • -Scale, Scope, indivisible Equipment, Production, R&D and marketing
      • Managerial Synergy
      • -Restructuring, Better Allotment of Authority, and Usage of Surplus Managerial Personnel
    • D. Pure Diversification
      • Risk Management
      • Better Usage of Managerial Personnel
      • Better Exposure to Managerial Personnel
      • Better Visibility of the Company
      • Distributors Support
    • E.Strategic Realignment
      • Changing Market
      • Changing Economic Environment
    • F. Undervaluation
      • Perception of the Market
      • Underperformance
      • Target Company’s market Image
    • II Information & Signalling
      • Coming into the news
      • Media Exposure
      • Higher Visibility
      • Market taking note
      • Hidden Valuation for the Target Company
      • Strength of the Acquiring Company
    • III Market Power
      • Increasing Market share
      • Becoming a Trendsetter
      • Avoidance of Price War
      • Reduced Marketing Expenses
      • Avoidance of Duplicating Efforts
      • Rationalisation
    • IV Tax Considerations
      • Assuming Losses of the Target Firm
      • Carry Over of Tax Credits
      • Avoidance of Dividend thus reducing Tax Liability
      • Saving Sales Tax in case of Vertical Integration
    • V.Agency Problem & Managerialism
      • Shareholders are the Principal and the Managers are the Agents
      • When Managers act in their own interest, they benefit at the cost of Shareholders
      • By Takeover, such Managers are removed
      • Lesser Image in the Stock Market
      • Target for the Acquirer
      • Managerialism believes Takeover is the result of Agency Problem
    • VI Hubris Hypothesis
      • Winners Curse make the Acquirer to be overconfident of his estimates
      • Heavy Premium is explained
      • Acquirer believes that he is a better judge than others
      • In a competitive tender offer, the urge to win comprises the Hubris
      • Happens due to the urge to avoid loss of face, getting publicity in the media, inexperience, overestimation of synergy, over enthusiasm of Investment Bankers etc.
    • THANK YOU