【G4】Growth through Acquisition (Acquisition Analysis (tips for successful…
【G4】Growth through Acquisition
know the reasons for failing
choose the best strategic alliance
formula for choosing strategic
Efficiency,Complementary,Consolidation,Lower Diversity Risk
Value of target 1.independent 2. added
Any other cost make it be a success
acquisition. ex: Intergration cost
Considerating potential cost
The best alternative option
tips for successful acquisition
how to create the value more
improve one's competitive position
consider the alternatives
strategic benefit-purchase price > the cost
A merger is a transaction where two firms agree to integrate their operations on a relatively equal basis
An acquisition is a transaction where one firm buys another firm and then makes the acquired firm a subsidiary or subsumes that firm within its own portfolio of businesses.
Mergers and Acquisition constitute the most common method of implementing a growth and/or diversification strategy.
M&A can aid a consolidation strategy
M&A involves significant and unique capital budgeting decisions
No “dry run,” all money paid up front
Substantial exit costs (in dollars and reputation)
Managing integration is extremely complex, much like starting a new business.
Pros and Cons
Question we should ask
Why do they fail?
Why do firms persist in attempting M&A?
The winner's curse
Escalation of commitment
Rationalizing past behavior
When in competition , giving up
Pre-existing bias distorts perception of information
Selective attention to supporting information
Growth through Scaling
Internal Development (innovation)
Pros and Cons
Many forms, from straightforward (R&D or marketing partnerships) to more complex (freestanding joint ventures)
Potentially less resource intensive than M&A
Access partner’s complementarities
Utilizes partner’s capabilities
More complex than an arms-length contract
Revenue sharing (dividing the gains)
Sharing control (risk of goal incompatibility)
Risks of helping nurture competitors
Alliance is a cooperative relationship between firms involving the sharing of resources in pursuit of common goals. In particular, strategic alliance refers to the one between potential or actual competitors.
How to M&A
solicits an offer from the acquirer
haven't necessarily solicited any sort of a buyout offer