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Group Six M&A
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Group Six M&A

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My part of presentation about M&A... (Don't own the rest ;))

My part of presentation about M&A... (Don't own the rest ;))

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Group Six M&A Presentation Transcript

  • 1. Why do M&A happen… Closser look at: “ L'Oreal” and “Body shop” merger
  • 2. What is M&A
    • M&A (mergers and acquisitions)
    • an aspect of corporate strategy dealing with the buying, selling or combining of different companies that can aid, finance, or help a company grow rapidly without having to create another business entity
  • 3. A is bigger than M
    • In reality there is only 3% of mergers and all rest are pure acquisitions - 97% of M&A cases
    • … 97 out of 100 deals have a clear looser and a clear winner…
  • 4. 57 M&A’s in two days
    • How
    • often
    • does
    • M
    • and
    • A
    • happen
    • ?
    • ?
    • ?
  • 5. M&A Advantages
    • Greater Value Generation
      • value of the sum of the companies higher than the two separate companies
    • Gain in Market Share
      • Instant increase in market share with no efforts
    • Gaining Cost Efficiency
      • Economies of scale - the cost of production per unit is reduced.
    • … also beneficial :
      • when a firm wants to enter a new market
      • when a firm wants to introduce new products through research and development
      • when a firm wants achieve administrative benefits
  • 6. M&A disadvantages
    • Diseconomies of scale
      • if business becomes too large, which leads to higher unit costs.
    • Clashes of culture
      • between different types of businesses can occur, reducing the effectiveness of the integration.
    • Workers redundant
      • especially at management levels – this may have an effect on motivation.
    • Conflict of objectives between different businesses
      • meaning decisions are more difficult to make and causing disruption in the running of the business.
  • 7. M&A: Why They Can Fail…
    • Historical trends show that roughly two thirds of big mergers will disappoint and they will lose value on the stock market.
    • A merger may often have more to do with glory-seeking than business strategy.
    • M&A’s are induced by bankers, lawyers and other assorted advisers who earn big fees from clients engaged in mergers
    • Merging companies can focus on integration and cost-cutting so much that they neglect day-to-day business
  • 8. … merge or acquisition…
    • “ L'Oreal” and “The Body Shop”
    … failure or success…