企业并购文献综述及外文文献资料.docx
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企业并购文献综述及外文文献资料
本文档包括改专题的:
外文文献、文献综述
一、外文文献
Financialsynergyinmergersandacquisitions.EvidencefromSaudiArabia
Abstract
Businessestodayconsidermergersandacquisitionstobeanewstrategyfortheircompany'sgrowth.Companiesaimtogrowthroughincreasingsales,purchasingassets,accumulatingprofitsandgainingmarketshare.Thus;thebestwaytoachieveanyoftheabove-mentionedtargetsisbygettingintoeitheramergeroranacquisition.Asamatteroffact,growththroughmergersandacquisitionshasbeenacriticalpartofthesuccessofmanycompaniesoperatingintheneweconomy.Mergersandacquisitionsareanimportantfactorinbuildingupmarketcapitalization.BasedonthreestructuredinterviewswithmajorSaudiArabianbanksithasbeenfoundthatmergersmotivatedbyeconomiesofscaleshouldbeapproachedcautiously.Similarly,companiesshouldalsoapproachverticalmergerscautiouslyasitisoftendifficulttogainsynergythroughaverticalmerger.Firmsshouldseekoutmergersthatallowthemtoacquirespecializedknowledge.Ithasalsobeenfoundthatfirmsshouldlookformergersthatincreasemarketpowerwhilstavoidingunrelatedmergersorconglomeratemergers.
Keywords:
Synergy,MergersandAcquisitions,SaudiArabia
1.Introduction
Thereisamajordifferencebetweenmergersandacquisitions.Mergersoccurbetweensimilarlysizedcompaniesandthecollaborationis"friendly"betweenbothcompanies.However,Acquisitionsoftenoccurbetweendifferentlysizedcompaniesandthepartnershipisusuallyforcedandhostile.
WheelenandHunger(2009)defineamergerasatransactioninvolvingtwoormorecorporationsinwhichstockisexchangedbutinwhichonlyonecorporationsurvives.Inotherwords,thetwocompaniesbecomeoneandthenameforthecorporationbecomescompositeandisderivedfromthetwooriginalnames.Furthermore,anacquisitionisthepurchaseofacompanythatiscompletelyabsorbedasanoperatingsubsidiaryordivisionoftheacquiringcorporation(WheelenandHunger,2009).Theauthorsalsostatethathostileacquisitionsarecalledtakeovers.
Themainreasonforfirmsenteringintomergersandacquisitions(M&A)istogrow,andcompaniesgrowtosurvive(Akinbuli,2012).Growthstrategiesexpandthecompany'sactivitiesandaddtoitsvaluesincelargerfirmhavemorebargainingpowerthansmallerones.Afirmsustaininggrowthwillalwayshavemoreopportunitiesforadvancement,promotionsandmorejobstoofferpeople(WheelenandHunger,2009).Ingeneral,mergersanddifferenttypesofacquisitionsareperformedinthehopeofrealizinganeconomicgain.Forsuchabusinessdealtotakeplace,thetwofirmsinvolvedmustbeworthmoretogetherthaneachwasapart.
AfewoftheprospectiveadvantagesofM&Aincludeachievingeconomiesofscale,combiningcomplementaryresources,garneringtaxadvantages,andeliminatinginefficiencies.Otherreasonsforconsideringgrowththroughacquisitionscontainobtainingproprietaryrightstoproductsorservices,increasingmarketpowerbypurchasingcompetitors,shoringupweaknessesinkeybusinessareas,penetratingnewgeographicregions,orprovidingmanagerswithnewopportunitiesforcareergrowthandadvancement(Brown,2005).
ManyfirmschooseM&Aasatooltoexpandintoanewmarketornewareaofexpertisesinceitisquickerandcheaperthantakingtheriskalone.Furthermore,M&Ahappenwhenseniorexecutivesfeelenthusiasticandexcitedaboutapotentialdeal;theideaofsuccessfullypursuingandtakingoveranothercompanybeforethecompanyscompetitorsareabletodoso.Competitioninagrowingindustrydrivesfirmstoacquireothers.Infact,asuccessfulmergerbetweencompaniesincreasesbenefitsfortheentirecorporation.
However,failuresalsooccurinM&AasindicatedbyHaberbsergandRieple(2001)andAkinbuli(2012).Theyshowedthat50%ofacquisitionsareunsuccessful;theyincreasemarketpowerbutdonotnecessarilyincreaseprofits.Brown(2005)explainsthereasonsforthehighfailurerateofM&Aasfollows:
(a)Over-optimisticassessmentofeconomiesofscale.Economiesofscaleareusuallyachievedatcertainbusinesssize.However,expansionbeyondtheoptimumlevelresultsindisproportionatecostdisadvantagesthatleadtovariousdiseconomiesofscale.
(b)Inadequatepreliminaryinvestigationcombinedwithaninabilitytoimplementtheamalgamationefficiently.Resistancetochangeandtheinabilityfortheacquiredcompanytomanagechangewellisamainreasonforfailureduetotheresistanceoftheemployeesandmanagementofbothcompaniesinvolved.
(c)Insufficientappreciationofthepersonnelproblems,whichwillarise,isduemainlytothedifferingorganizationalculturesineachcompany.
(d)Dominanceofsubjectivefactorssuchasthestatusoftherespectiveboardsofdirectors.
Therefore,draftingcarefulplansbeforeandafterthemergerisanecessitythatshouldnotbeoverlooked.Somecompaniesfindthesolutioninhiringachangemanagerwhowilladdvalueandbettermanagethetransitionofthe"marriagebetweenbothcompanies"(Brown,2005).
2.SynergyinM&Aandfinancialsynergy
ThissectiondiscussestheliteraturereviewinordertoidentifytheimportanceofacquiringfinancialsynergyintheM&A.
2.1SynergyinM&A
Synergy,asdefinedinthebusinessdictionary,isthestateinwhichtwoormoreagents,entities,factors,processes,substances,orsystemsworktogetherinaparticularlyfruitfulwaythatproducesaneffectgreaterthanthesumoftheirindividualeffects.Synergyisthemagicforcethatallowsforenhancedcostefficienciesofthenewbusiness.Synergytakestheformofrevenueenhancementandcostsavings(Mergersandacquisitions:
Definition,n.d.).
Synergyisalsoexpressedasanincreaseinthevalueofassetsasaresultoftheircombination.Expectedsynergyisthejustificationbehindmostbusinessmergers.Forexample,the2002combinationofHewlett-PackardandCompaqwasdesignedtoreduceexpensesandcapitalizeoncombiningHewlett-Packard'sreputationforqualitywithCompaq'simpressivedistributionsystem(SynergyBusinessDefinition,n.d.).
Throughresearchithasbeennotedthatsynergyistheconceptthattwobusinesseswillgenerategreaterprofitstogetherthantheycouldseparately(WheelenandHunger,2009).Synergyissaidtoexistforadivisionalcorporationifthereturnoninvestmentofeachdivisionisgreaterthanwhatthereturnwouldbeifeachdivisionwereanindependentbusiness(WheelenandHunger,2009).Inordertosucceedcooperationbetweenthepartnersisthebasicingredientforachievinggrowththroughsynergy(Rahatullah,2010).Thisrequirespartnerstobuildtrust,commitment,andsecureconsensus,toachievetheirtargets(Gronroos,1997;RingandVan-de-Ven,1994).
Synergycantakeseveralforms.AccordingtoGooldandCampbell(1998)synergyisdemonstratedinsixways:
benefitingfromknowledgeorskills,coordinatedstrategies,sharedtangibleresources,economiesofscale,gainingbargainingpoweroversuppliersandcreatingnewproductsorservices.
M8However,Brown(2005)summarizesthesourcesofsynergythatresultfromM81.Operatingeconomieswhichinclude:
(a)Economiesofscale:
Horizontalmergers(acquisitionofacompanyinasimilarlineofbusiness)areoftenclaimedtoreducecostsandthereforeincreaseprofitsduetoeconomiesofscale.Thesecanoccurintheproduction,marketingorfinancedivisions.Notethatthesegainsarenotexpectedautomaticallyanddiseconomiesofscalemayalsobeexperienced.Thesebenefitsaresometimesalsoclaimedforconglomeratemergers(acquisitionofcompaniesinunrelatedareasofbusiness)infinancialandmarketingcosts.
(b)Economiesofverticalintegration:
Someacquisitionsinvolvebuyingoutothercompaniesinthesameproductionchain.Forexample,amanufacturerbuysoutarawmaterialsupplieroraretailer.Thiscanincreaseprofitsthrougheliminatingthemiddlemaninthesupplychain.
(c)Complementaryresources:
Itissometimesarguedthatbycombiningthestrengthsoftwocompaniesasynergisticresultcanbeobtained.Forexample,combiningacompanyspecializinginresearchanddevelopmentwithacompanystronginthemarketingareacouldleadtogains.Combiningtheexpertiseofbothfirmswouldbenefiteachcompanythroughthegainedknowledgeandskillsthatindividuallytheylack.
(d)Eliminationofinefficiency:
Ifeitherofthetwocompanieshadbeenbadlymanaged;itsperformanceandhenceitsvaluecanbeimprovedbytheeliminationofinefficienciesthroughM&A.Improvementscouldbeobtainedintheareasofproduction,marketingandfinance.
2.Marketpower;Horizontalmergersmayenablethefirmtoobtainadegreeofmonopolypowerwhichcouldincreaseitsprofitability.Coordinatedstrategiesbetweenbothcompanieswillleadtheentireorganizationingainingcompetitiveadvantage.Gainingbargainingpoweroversuppliersisrealizedsincethecompanyislargerinsizeafterthemerger.
3.Financialgains;Companieswithlargeamountsofsurpluscashmayseetheacquisitionofothercompaniesasthebestapplicationforthesefunds.Sharedtangibleresourcessuchassharingabiggerb