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  • 1. SOURCES OF VALUE CREATION IN MERGER & ACQUISITION
  • 2. Members of group -A1-SOUMYALIN SANTY2-HINA SULTANA3-SUMIT PARIDA4-SRADHANJALI BEHERA
  • 3. INTRODUCTIONWHAT IS VALUE?Value: Originated from a French word: “valoir” which means ‘be worth’.WHAT IS VALUE CREATION?Value creation means performing activities thatIncreases the value to customers and also to theShareholders.
  • 4. Value Creation through M&A – What it means? • Synergies & Economies of Scale • Gain access to new markets, customers, products • Diversification of Risks • Access to New Technology and Knowledge • Ability to limit competition / gain market share
  • 5. Value Creation Through M&A – Case Study Company B Company A Primarily North India Focussed Strong in Western India
  • 6. What benefits will potentially accrue if Company A and B were to merge? Ability to sell bundled product (inverters & batteries) Organic Expansion – Access to newer markets for Battery Manufacturing in different products (North & North India West) Product Use of common diversification / distribution network Season neutral Value Creation Through Mergers &PwC 20116 April Slide 6 Acquisitions
  • 7. “Value Creation” through this transaction..... Company A+B = Enhanced revenue & customer base + product diversification + cost savings + production efficiencies + new markets ultimately leading to… ‘Improved shareholders wealth’ Value Creation Through Mergers &PwC Slide 7 Acquisitions
  • 8. SOURCES OF VALUE CREATION IN M&AThere are four sources or models which create values- 1- ANSOFF’S PRODUCT MARKET MATRIX MODEL 2- BCG MATRIX MODEL 3- GRAND MATRIX MODEL 4- INDUSTRY/PRODUCT LIFE CYCLE Value Creation Through Mergers &PwC 20116 April Slide 8 Acquisitions
  • 9. ANSOFF’S PRODUCT MATRIX Value Creation Through Mergers &PwC 20116 April Slide 9 Acquisitions
  • 10. Market Guru Phillip Kotler divided this into 3 stages:• 1st stage is Intensive Growth Strategy:A. MARKET PENETRATIONB. MARKET DEVELOPMENTC. PRODUCT DEVELOPMENT• 2nd stage is Integrative Growth Strategy:A. BACKWARD INTEGRATIONB. FORWARD INTEGRATIONC. HORIZONTAL INTEGRATION• 3rd stage is diversification growth strategy:A. CONCENTRIC DIVERSIFICATIONB. HORIZONTAL DIVERSIFICATIONC. CONGLOMETRIC DIVERSIFICATION Value Creation Through Mergers &PwC 20116 April Slide 10 Acquisitions
  • 11. Value Creation Through Mergers &6 April 2011 Slide 11 Acquisitions
  • 12. 1.STAR- STRATEGIES APPLIED ARE INTENSIVE STRATEGY, INTEGRATIVESTRATEGY AND CONCENTRIC.2.QUESTION MARK-STRATEGIES APPLIED ARE INTENSIVE GROWTHSTRATEGY3.DOG- STRATEGIES APPLIED ARE DIVESTURE AND LIQUIDATION.4.CASH COW- CONCENTRIC CONGLOMETRIC & HORIZONTALDIVERSIFICATION.
  • 13. GRAND MATRIX• THERE ARE 4 STAGES OF GRAND MATRIX1. STAGE 1-STAR IN BCG MATRIX2. STAGE 2-QUESTION MARK3. STAGE 3-DOG4. STAGE 4-CASH COW Value Creation Through Mergers &PwC 20116 April Slide 13 Acquisitions
  • 14. Value Creation Through Mergers &6 April 2011 Slide 14 Acquisitions
  • 15. STRATEGIES APPLIED • INTRODUCTION STAGE: MARKET PENETRATION,MARKET DEVELOPMENT,CONGLOMETRIC DIVERSIFICATION & HORIZONTAL INTEGRATION • GROWTH STAGE:HORIZONTAL MERGER, DIVESTURE, CONGLOMERATE DIVERSIFICATION • MATURITY STAGE: HORIZONTAL MERGER, DIVESTURE . • DECLINE STAGE:DIVESTURE CONGLOMERATE DIVERSIFICATION.
  • 16. CONCLUSIONFrom the above discussion we come to aconclusion that for creating values for theAcquirer’s they remain an important part ofany company’s long term value creationStrategy. The benefits of a well thought outM&A strategy can be a source of competitive advantage. Value Creation Through Mergers &PwC 20116 April Slide 16 Acquisitions
  • 17. THANK YOUANY QUESTIONS………….? Value Creation Through Mergers &PwC 20116 April Slide 17 Acquisitions