Mergers and aquisitions strategy

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Mergers and aquisitions strategy

  1. 1. Mergers and Acquisitions Strategy Dr. Sandeep Kulshrestha
  2. 2. Philosophy behind mergers and acquisitions Part of the overall concept of “integration” A merger capitalizes on “mutual synergy” of the Strengths of the merging entities Acquiring an existing company is better strategy than scaling up on its own It is also an strategy to showcase an organisation on a broader scale
  3. 3. Merger defined A merger is unification of two or more firms into one entity, with an objective of better profitability and high value to the stakeholders” In nutshell merger usually happens within companies who are in the similar line of business, with an objective to scale-up the operations Example: IDBI bank merged with United Western Bank
  4. 4. Acquisition defined Acquisition normally signifies acquiring/buying of a smaller company by a large company in the similar line of business. Acquisition can be either normal (by consent) or forced (by acquiring large amount of shares in a company) Example: United Breweries acquired Shaw Wallace’s liquor business.
  5. 5. The need of mergers and acquisitions A well thought of corporate strategy to have substantial market share Synergy of mutual expertise and experience, which helps in scaling up the market potential Better reach of products and services Acquiring another company or merging with another company gives a better leverage Can lead to better Earning per share and shareholders’ expectations
  6. 6. Strategic Parameters Synergy within corporations Capitalization of the Strengths of merging companies/acquired company and nullification of weaknesses The opportunity which the market may provide post merger/acquisitions How the merger/acquisition will help the company’s long term vision In short, what will be the value addition for a company!
  7. 7. Strategic Exercises Financial modeling Governance issues Shareholding Patterns Human Resources Strategy Management of investments Fund allocation for new activities Re-framing of vision/mission Marketing strategy Fresh Branding exercises

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