Impact of Merger and Acquisition on Organizational Performance

The assignment provides a detailed report on the importance of merger and acquisition in organizational as well as country-level performance. It explains the process of merger and acquisition, highlighting their role in generating more profit and revenue by combining entities with similar natures or acquiring successful firms. The analysis also touches upon the impact of these transactions on countries' economical conditions, making it a valuable resource for students and professionals seeking to understand this complex financial concept.

INTERNATIONAL
MANAGEMENT

Table of Contents
INTRODUCTION ..........................................................................................................................1
Executive summary ....................................................................................................................1
Merger and Acquisition ................................................................................................................1
A) The success of merger and acquisition in the UK, USA, Japan and Germany .....................2
B) Compare the countries with each other .................................................................................4
International harmonization in merger and acquisition..............................................................4
CONCLUSION ...............................................................................................................................4
REFRENCES...................................................................................................................................6
.........................................................................................................................................................6

INTRODUCTION
Executive summary
Mergers and acquisitions are very wide term, it describes as the consolidation of
companies. M&A is a combination of various activities such as consolidation, mergers,
acquisition, offers, tenders, assets etc. Merger can be described as the combination of two or
more organisation, who are combining their business activities and the profit is equally divided
among both of them (Asimakopoulos and Athanasoglou, 2013). They are merge for some similar
set of goals and objectives. The actual meaning of acquisition is one organisation acquire by the
other company or organisation for the purpose of making profit and growth. Merger and
acquisition are the most importation element of corporate finance world. In the condition of
merger the board director of company are responsible to take an effective decision to merge with
other organisation. For merge the companies there is a approval required from board of directors
and shareholders. After merger the combined company ceases to survive and become part of the
acquiring firm. Acquisition is a simple term in which acquiring company receive the majority of
stake in the organisation and in this there is not any allowance of changing name of legal or
organisational structure. These two aspect helps an organisation to grow, shrink and change the
nature of organisation and its competitive position. The activity of merger and acquisition in UK
and USA is more active as compared to other industrial countries such as Japan and Germany.
Merger and acquisition are most essential element through which organisational and countries
growth is increases. It has a direct positive impact on sellers market position more than buyers.
With the help of these elements seller can increasing their gaining position. M&A has positive as
well as negative impact on countries economic condition.
Merger and Acquisition
Merger and acquisition are the most essential part of corporate finance world, the bankers
of wall street investment are helpful in arranging the transactions related with M&A which
describes that every day large number of companies are merge together to establish a large one
for generating more profit for country as well as organisation. Merger and acquisition are
different from each other, they both are slightly different from each other. In the situation of
merger same and similar profile companies are merge together and established as a big
organisation for some similar set of goals and objectives. When an organisation take over an
1

another firm and establish their self as a new owner, this situation is known as acquisition. In the
condition of merger the stock of both the companies are relinquished and new stock is issued in
its place with different criteria. The deal manager and makers are responsible to create the
acquisition more palatable. The merger and acquisition is categories in to various parts which are
described as under:
Conglomerate: In this merger among organisation which are involved in unrelated
activities of business. Two important part of conglomerate are pure and mixed. In pure
2

conglomerate merger the firms who are merged are not having any common entity among them.
Thus mixed conglomerate merger include firms who are more conscious towards products
extension and market extension (Ferris, Jayaraman and Sabherwal, 2013).
Horizontal merger: IT describes as the business consolidation which arises among organisations
who are work in common space. In this competitors of firm are also offers the similar kind of
goods and services.
Market extension merger: In this kind of merger companies are deal in same goods and services
but work in separate market. The major purpose of this mere is to attract large number of
customers and access to a bigger market.
Product extension market: These kind of merger are take place among two big companies who
are deals in variety of products that are related with each other and run in same area of market.
Their major purpose of these merger is to acquiring large number of customers in respect of
earning huge amount of profit.
Vertical merger: A fusion between two organisations developing various products and services
for one finished good. This situation is happen when two organisations are operating their
activities in different departmental levels in a single supply chain.
3

4

As per the above graph it has been evaluated that in the previous timing the impact of
merger and acquisition is very low, less number of organisations are taking step forwards
towards merge with each other for the purpose of increasing their profitability and growth. As
pass the timing it become an essential part of market, large number of firms are focused on
acquire other firms in order to generate high range of profit for the purpose of future run of an
organisation. The basic aim of every organisation is to satisfy customers through offering high
quality of goods and services which helps to fulfil the demand and wants of targeted customers.
5

A) The success of merger and acquisition in the UK, USA, Japan and Germany
Merger and acquisition is known as more common place where large number of groups
are delivering the market values and expected benefits.
Countries Success of Merger and Acquisition
UK Large number of companies are focused on integrating various tangible
assets in their firm for improving their overall performance and task. IT
system has a great impact on attaining cost activity to detriment of their
clients. There are two major factors which helps in success of M&A are
explained in detail:
Striking the right balance among tangible and intangible assets:
This point is basically focused on taking organisational capital, rational
capital and human capital in to proper action in order to establishing
effective organisations (Halkos and Tzeremes, 2013).
The impact of leadership:
It is required for firm to putting the new created team at high position
as soon as possible, so that they can easily state the new and effective
vision, mission and value for firm. This helps in finding out the leader
with appropriate skills to manage the organisation in well planned
manner.
USA Merger and acquisition can be describes as the well planned strategy
for growth and success of firms who are involved in this. With the
helps of this strategy an organisation can easily reduce the excess
capacity, increase the access of market and get the technology more
quickly than it could be reinforced or develop new business activities.
The M&A helps in increasing the economy of country so that country
can grow at a sustain level. USA is well established and settled country
who focuses on take over on other companies who belongs to other
geographical area in respect of earning more profit for country and
develop countries economy.
6

Japan In the country of Japan merger and acquisition play a significant role in
for increasing their market condition. They mainly concentrated on
taking over small group of companies and integrate their employees
and management system into one, this method helps in encouraging
employees for improving their performance and skills for
organisational as well as their own success. They mainly focuses on
creating attractive acquisition. This process is not much applicable for
bring the benefits which were expected (Netter, Stegemoller and
Wintoki, 2011).
Germany M&A in the America are the most strategic value for the companies of
German in the respect of becoming most popular global players. The
volume of cross border transaction hows the firms expectation which
are involved in creating values in the economy and the most significant
consumer market.
B) Compare the countries with each other
Federal trade commission USA: This ensures that these written record are compliant with fair
business relation and antitrust laws. They are mainly focused on anti competitive behaviour in
such transactions and combining of market share who are having single entity.
Competition commission: They work under enterprises 2002, according to this low an
organisation is not having any authority to expand their business activities more than a desired
percentage. So companies are bond to not purchasing a big organisation for acquiring and
expanding their business activities, because this may cause issue for local small relaters or other
business enterprises (Krishnan and Masulis, 2013).
I amended companies act of 2014 in Japan: This act is stated in may 2015, according to this act
the ministry of country of responsible for all activities related with merger and acquisition. This
is mainly concentrated on regulation of transaction related with merger and acquisition.
Private merger and acquisition in Germany: This law is based on merger of private sectors
who are working for similar goods and services. According to this law their separate stock are
restricted and they are allow to work with new and separate stock.
7

International harmonization in merger and acquisition
International harmonization can be described as the process of combination of various
standardizing laws, rules, regulations and practices to assist the effectiveness, fairness and
expansion of competing in a wide area of economy as in emerged in different area such as
international accounting standards, financial market, harmonizes training practices. This is also
known as the sharing of different kind of technologies for information diffusion. Merger and
acquisition is depend on harmonization because it is the wide process in which all major
activities such as accounting, technological informations are take place.
CONCLUSION
As per the above report it has been concluded that merger and acquisition are the
important term which impacted on organisational as well as countries performance. In the
process of merger, the entities who are having similar kind of nature are involved and become a
single organisation for the purpose of generating more profit and shares. In acquisition
companied are focused on take over on other successful firms for acquiring more beneficial
growth and success for firm. These two term are having impacted on countries economical
condition. Merger and acquisition can be determined as the transactional process in which the
ownership of firm or its activities are transferred or combined with each other in respect of
earning more profit and revenues.
8

REFRENCES
Books and Journals
Asimakopoulos, I. and Athanasoglou, P. P., 2013. Revisiting the merger and acquisition
performance of European banks. International review of financial analysis. 29, pp.237-
249.
Ferris, S.P., Jayaraman, N. and Sabherwal, S., 2013. CEO overconfidence and international
merger and acquisition activity. Journal of Financial and Quantitative Analysis. 48(1),
pp.137-164.
Halkos, G. E. and Tzeremes, N. G., 2013. Estimating the degree of operating efficiency gains
from a potential bank merger and acquisition: A DEA bootstrapped approach. Journal
of Banking & Finance. 37(5). pp.1658-1668.
Krishnan, C. N. V. and Masulis, R. W., 2013. Law firm expertise and merger and acquisition
outcomes. The Journal of Law and Economics. 56(1). pp.189-226.
Netter, J., Stegemoller, M. and Wintoki, M. B., 2011. Implications of data screens on merger and
acquisition analysis: A large sample study of mergers and acquisitions from 1992 to
2009. The Review of Financial Studies. 24(7). pp.2316-2357.
Phillips, G.M. and Zhdanov, A., 2012. R&D and the Incentives from Merger and Acquisition
Activity. The Review of Financial Studies. 26(1). pp.34-78.
Von Kalinowski, J. O., and et. al., 2016. Determining Legality and Defenses (Vol. 2). Antitrust
Laws and Trade Regulation, Second Edition.
Zhang, J., and et. al., 2015. The effect of leadership style on talent retention during merger and
acquisition integration: Evidence from China. The International Journal of Human
Resource Management. 26(7). pp.1021-1050.
9