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motives for takeovers and mergers - Coggle Diagram
motives for takeovers and mergers
motives
strategic motives
focused on improving and developing the business
closely linked to compatative advantage
key strateigic motives
extend the business
locations,markets,globilasation
change competative structure
consolidation,remove competition,economies of scale
financial motives
focused on making the best use of finanacial resources for shareholders
concerned with improved financial performance
make use of surplus cash
bargin hunting and asset stripping
managerial motives
foused on the self interest of managers
not necessarily in the best interest of shareholders
personal ambition
cirector rewards may be linked to growth
big takeoovers boost pulicity and boost ego
band wagon effect/peer pressure
pressure to do takeovers
concern that firm may be being left behind
over confidence
pressure from advisers and media
depends on points
is the firm at a competative disadvantage if so
then a strategic acquisition might have potentialm to tranform its position
does the acquiring firm have the financial resources to be able to pursue an external groeth stratergy how supportive are its shareholders and lenders
is the takeover/merger opportunistic or part of a long term strategic plan
advatages of acquisitions
quick access to resources and skills the business needs overcomes barriers to entry
helps spread risk
revenue growth oppertunities
cost saving opportunities
reduces competition
may enable economies of scale
draw backs of acquisitions
high cost,problems of valuation
clash of cultures,upset customers
problems of intergration,resistance from emplyees
non exsistant synergy, incompatibility of managment styles structures and culture
questionable motives, high faliure rate
diseconomies of scale
