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Mergers and Acquisitions: reasons and consequences at the international market

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ingénierie financière

About the document

Published date
documents in English
40 pages
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  1. Abstract
  2. Introduction and methodology
  3. Mergers and acquisitions: The overview
    1. Definition of mergers and acquisitions
    2. Classification of mergers and acquisitions
    3. Modes of payment for mergers and acquisitions
    4. Motivations behind mergers and acquisitions
    5. History of mergers and acquisitions
  4. Creation and destruction of value through mergers and acquisitions
    1. Definition of value creation
    2. Detailed analysis of mergers and acquisitions performance
    3. Distribution of value creation in mergers and acquisitions
    4. Factors leading to failure
  5. Valuation of mergers and acquisitions
    1. The price margins
    2. Valuation methods
    3. Valuation of remedy corporation
  6. Conclusions and recommendations
  7. Bibliography
  8. Appendices
  9. Endnotes

The paper deals with the issue of mergers and acquisitions on the western market, viewing the topic from the standpoint of their failure and success. The subject is an extremely important one at present, as, on the one side, there is a trend towards major international mergers and acquisitions and, on the other side, many researches indicate that more than half of deals fail.
Having done the research on main factors of failure of Mergers and Acquisitions, it was established that companies fail transactions, because they forget about shareholders' interests and are often driven by their own interests and motivations. While shareholders are interested in financial flows that can generate a particular transaction, managers often overpay for the target, by mistake and sometimes even intentionally, and thus transfer wealth to target's company. Secondly, managers pay often in stock rather than in cash, communicating in such a way to shareholders about company's insufficient liquidity. There have been determined some other less frequent factors of failure, but still affecting acquiring company's shareholders.
The moral of the paper consists in that shareholders have an uncanny knock to react immediately to changes in corporate structure by pushing up or by pulling down the stock prices. Although there exist numerous motivations for mergers and acquisitions, companies must always set in advance the ultimate goal of value creation for their shareholders

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