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Group Six M&A


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

Published in: Business, Economy & Finance
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Group Six M&A

  1. 1. Why do M&A happen… Closser look at: “ L'Oreal” and “Body shop” merger
  2. 2. What is M&A <ul><li>M&A (mergers and acquisitions) </li></ul><ul><li>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 </li></ul>
  3. 3. A is bigger than M <ul><li>In reality there is only 3% of mergers and all rest are pure acquisitions - 97% of M&A cases </li></ul><ul><li>… 97 out of 100 deals have a clear looser and a clear winner… </li></ul>
  4. 4. 57 M&A’s in two days <ul><li>How </li></ul><ul><li>often </li></ul><ul><li>does </li></ul><ul><li>M </li></ul><ul><li>and </li></ul><ul><li>A </li></ul><ul><li>happen </li></ul><ul><li>? </li></ul><ul><li>? </li></ul><ul><li>? </li></ul>
  5. 5. M&A Advantages <ul><li>Greater Value Generation </li></ul><ul><ul><li>value of the sum of the companies higher than the two separate companies </li></ul></ul><ul><li>Gain in Market Share </li></ul><ul><ul><li>Instant increase in market share with no efforts </li></ul></ul><ul><li>Gaining Cost Efficiency </li></ul><ul><ul><li>Economies of scale - the cost of production per unit is reduced. </li></ul></ul><ul><li>… also beneficial : </li></ul><ul><ul><li>when a firm wants to enter a new market </li></ul></ul><ul><ul><li>when a firm wants to introduce new products through research and development </li></ul></ul><ul><ul><li>when a firm wants achieve administrative benefits </li></ul></ul>
  6. 6. M&A disadvantages <ul><li>Diseconomies of scale </li></ul><ul><ul><li>if business becomes too large, which leads to higher unit costs. </li></ul></ul><ul><li>Clashes of culture </li></ul><ul><ul><li>between different types of businesses can occur, reducing the effectiveness of the integration. </li></ul></ul><ul><li>Workers redundant </li></ul><ul><ul><li>especially at management levels – this may have an effect on motivation. </li></ul></ul><ul><li>Conflict of objectives between different businesses </li></ul><ul><ul><li>meaning decisions are more difficult to make and causing disruption in the running of the business. </li></ul></ul>
  7. 7. M&A: Why They Can Fail… <ul><li>Historical trends show that roughly two thirds of big mergers will disappoint and they will lose value on the stock market. </li></ul><ul><li>A merger may often have more to do with glory-seeking than business strategy. </li></ul><ul><li>M&A’s are induced by bankers, lawyers and other assorted advisers who earn big fees from clients engaged in mergers </li></ul><ul><li>Merging companies can focus on integration and cost-cutting so much that they neglect day-to-day business </li></ul>
  8. 8. … merge or acquisition… <ul><li>“ L'Oreal” and “The Body Shop” </li></ul>… failure or success…