SMMCG8[CS-2] Corporate Transactions

G8 Group member

外文四 楊芯樺 Katherine

國企四 鄭淳芬 Ruby

外文四 蕭 逸 Sophia

國企三 陳宜萱 Cindy

國企三 尹薔雰 Rose

中文四 鄭淳芳 Angel

Divestitures

separate business from company

models

split-off

carve-out

spin-off

change of its ownership

separate from parent's company

share is distributed to parent's company's shareholders

shareholders have choice of exchange of the unit

parent's company retain control

IPO/investors involve

unit sales

be sold to another firm

reasons

raise cash

focus on core business

reduce the risk or liability

a lack of strategic fit

get rid of low profitability unit

free up and redeployed

resource

entrepreneurial

innovative potential

clear

open

Mergers and Acquisitions

M&As

What the distinction is between mergers and acquisitions?

mergers

acquistions

friendly approach

purchase or takeover

combining two companies

similar size

friendly or unfriendly

hostile takeover

Ex:Broadcom

Ex:Amazon Whole Foods

Do they actually create value?

acquirer offer a better deal than they're getting in the stock market

an excessive premium offered for the target

many M&As end up destroying value

Why companies do mergers and acquisitions?

access new markets or new technologies

Ex:Salesforce's acquisition of Tableau

superior acquisition and integration capability

Ex:Cisco

overcome competitive disadvantages

good for managers(principal agent problem)

managerial hubris

Introduction

Corporate Transactions

divestitures

alliances and contracts

mergers and acquisitions

a portfolio view

actions with other entities that change or manage the scope of the firm

Strategic Alliances

A Portfolio View

reduce risk

future

significance

summary

intertemporal effects

two kinds of M&A

develop new capabilities

apply the acquirer's capabilities

brings in new products, or technologies, or even talent with a particular skill set

leveraging strategy

usually finds to be value-destroying

if there are capabilities-based synergies, they can create a value surplus in the M&A.

most of the focus on M&A

carefully evaluates the target

the post-merger challenges

example : private equity

low interest rates

buy target companies and try to increase the value

improve their management

ends in exit their investment by selling off the target

taking on a lot of debt

actually no integrate the two companies and realize the synergies that were used to presumed

it is not uncommon for mergers to fail

ensuring the synergies

faithfully executing the integration plans

different cultures

a lot of the people from the acquired company leave

high turnover of the management skill

asymmetric information

do not have the available financial resources

unable to do strategies

managers may be overly focused on acquisitions, but not on the daily operations

Case study- Disney's corporate strategy

introduction

iconic hand-drawn animation characters

the company can own the characters fully

sequels often outsell originals

sequels have a built-in market that studios can target

multiple channels and overtime

TV and music

merchandising

Disneyland

comic strips

Pixar

revolutionising the making of animated movies

combining high tech advances with compelling storytelling and on-screen artistry

acquiring smaller movie studios like Pixar, Marvel and Lucasfilm

why acquisitions are value-creating for the company

doesn't shoulder all costs and risks

potential competitor

resolved conflict

learn from its partner

general conditions

equity stake

legal contractual terms

incentive

walling off key technology

mutual agreements

good relational governance

be adapted over time

lack of creative stories

use animated stories to revive Disney-related industries

changes in corporate resources over time

more permanent arrangements

learning through corporate transactions

acquire resources

forming alliance and say small equity investment

divestitures

trategic alliances

mergers and acquisitions

Google acquiring Android

destroy value

opposite phenomena of M&As

hybrid middle option

Interview

Brett Conradt Interview

Jamie Cleghorn Interview

the elements of value

discrete and measurable

Maslow's hierarchy

enduring way to create a winning strategy

putting the strategy wrapped around a customer value proposition

belief

companies don't change

people change

companies are collections of people

creating change

beach or that point of arrival

communicating

creating a preferred future for people

post-merger integration

all the synergies don't happen

Putting 80% of the energy on that 20% that's going to do

M&A itself is a skill

combine the preparation

create customer value

steps of thinking about a target to acquire

from an investment standpoint

from the macro view

the management team from the company

the private equity fund that's making the investment

investment bank who's representing the company for sale

focus on market size, market growth, competitive positioning, and different growth opportunities

look at where the capital is coming from

taking the capital and putting it to work

think bigger picture

positioning itself for sale and highlight the good things about the business

go beyond the pitch from the company

dive deep into the work and identify opportunities for growth

increase diversification

reduce risk

potentially reduce costs

increase revenue

protect managers

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