Mergers Verses Acquisitions; Joash, Gwaya Ondieki, and Mungai John Njangiru. “The effect of mergers and acquisitions on financial performance of banks (a survey of commercial banks in Kenya).” International Journal of Innovative Research and development 4.8 (2015): 101-113. http://business.ku.ac.ke/images/stories/research/effect_of_mergers.pdf
Ondiek and Njangiru claim that mergers and acquisitions play a critical role in corporate finance. This is because M&A enabling firms to achieve their objectives including the financial needs. This article aimed to investigate what effects mergers and acquisitions have on the profitability of Kenyan banks. Ondiek and Njangiru analyzed the mergers and acquisitions involving 14 banks in Kenya for the period between 2000 and 2014.
The authors used questionnaires as the main method of data collection. The data obtained was analyzed using SPSS. Ondiek and Njangiru found that mergers and acquisitions in Kenya affected raising shareholders’ value. However, the mergers and acquisitions had minimal impacts on both the amounts of dividends the frequency of issue to shareholders. The authors noted M&A had a strong positive relationship profitability. This is because M&A significantly impacts the market share, gross profit, and net profit.
Junni, Paulina, and Satu Teerikangas. “Mergers and Acquisitions.” Oxford Research Encyclopedia of Business and Management. 2019. DOI 10.1093/acrefore/9780190224851.013.15
Mergers and acquisitions have been common since the end of the 19th century and have significantly influenced growth, renewal, and competitive advantage. This article acknowledges that most mergers and acquisitions fail to achieve pre-determined goals. This article aimed to provide an overview of the research done since the 1950s regarding mergers and acquisitions. This article identified various types of M&A, including takeovers, minority acquisitions, divestments, buyouts, and minority acquisitions. Mergers Verses Acquisitions
Paulina and Teerikangas posited that M&A are conducted for various reasons. The reasons for conducting M&A include financial motives, managerial motives, and strategic motives. The authors note that mergers and acquisitions occur in waves. The first wave in the United States began in 1897, the second between 1920 and 1929, and the third began in the 1950s. This article states that we are currently witnessing the seventh wave of M&A.
Gomes, Armando, and Wilfredo Maldonado. “Mergers and acquisitions with conditional and unconditional offers.” International Journal of Game Theory (2020): 1-28. DOI:10.1007/s00182-020-00720-6
This article proposes a model that can be used in the process of industrial consolidation. The process followed help create synergy gains to the merging companies. It is worth noting that firms’ coming together may have a negative or positive impact on other firms left in the industry. This paper aimed to investigate the consequences of M&A that have conditional and those with unconditional offers.
Gomes and Maldonado noted that companies that provide acquisition offers that are conditional and unconditional on acceptance result in faster and economic mergers. This is because the acquired companies do not require to trade-off surplus extraction as well as efficiency. On the other hand, companies seeking to acquire other companies can opt for other mergers by providing unconditional offers to the remaining firms. Gomes and Maldonado show how the Markov perfect equilibrium always exists in mergers and acquisitions, especially those involving three firms.
Abdulazeez, D. A., O. Suleiman, and A. Yahaya. “Impact of merger and acquisitions on the financial performance of deposit money banks in Nigeria.” Arabian Journal of Business and Management Review 6.4 (2016): 1-5. DOI:10.4172/2223-5833.1000219
The Nigerian banking industry has been experiencing reforms in two decades. The reforms have seen changes effected relating to the number of banking institutions, ownership structures, and the nature of financial markets. This paper aimed to examine the impacts of M&A on the performance of few selected banks in Nigeria that deal with deposits. The literature reviewed by Abdulazeez, Suleiman, & Yahaya failed to show clearly the relationship between consolidations in banks and bank performances. Mergers Verses Acquisitions
The author selected four banks for the study and analyzed data from their annual reports. The paper found that M&A resulted in improved and robust financial performance, which increased financial efficiency in Nigerian banks. Abdulazeez, Suleiman, & Yahaya proposed that weaker banks should either merge or be acquired by bigger banks. It was also noted that aggressive marketing of financial products could increase the financial success of Nigerian banks.
Aktaş, Melike. “IDENTIFYING THE EFFECTS OF MERGERS AND ACQUISITIONS ON TURKISH BANKS’PERFORMANCES.” Asian Journal of Economic Modelling 6.3 (2018): 235-244.
The primary goal of mergers and acquisitions was to bring to financially fragile life companies. After some time, M&A refocused on banking institutions and public institutions. This paper aimed to analyze the impacts of mergers, acquisitions, and share transfers on banks’ financial performance in Turkey between 2001 and 2012. Melike used the probit model to study the change in performance in the nine banks subjected to mergers and acquisitions.
The author used both factor analysis and CAMELS analysis. This article found that many mergers and acquisitions had not attained the expected level of success. It was also noted that mergers, acquisitions, and share transfers have an insignificant effect on aspects such as management capability, quality of assets, liquidity ratios, and market risks. Therefore, M&A do not result in better financial performance of banks in Turkey.
Khan, Habib Ullah, and Mahmood A. Awan. “Can IT Industry Merger and Acquisition Effect on Brand Equity of their product/services? A case study from Qatar.” (2019).
Habib Ullah and Awan define branding as the combination of brand, name, and symbol in a manner that adds value to products and services. M&A increase the value of a brand and improve efficiency. This paper aimed to investigate the effect of brand equity on IT industry mergers and acquisitions. The authors used the consolidation between Microsoft-Skype technologies and Facebook-WhatsApp. Habib Ullah and Awan collected a total of 509 sample surveys through a random sampling method.
The study found that brand awareness’s effects on brand equity after consolidation are significantly higher than before in all four companies studied. The authors also noted that consumers had a substantial evaluation of brand awareness, but the effects were adverse. Customers’ service does not affect brand awareness and perceived brand value. The paper concluded that M&A help to enhance brand equity.
Gagnon, Marc-André, and Karena D. Volesky. “Merger mania: mergers and acquisitions in the generic drug sector from 1995 to 2016.” Globalization and health 13.1 (2017): 1-7.
Shortage of drugs supply and high purchase prices are associated with low level of competition in the drug sector. This article posited that M&A significantly affect the level of competition. Pharmaceutical companies seek for M&A for reasons such as economies of scale, acquiring assets such as patents, and gaining corporate control. M&A in the generic sector are associated with factors such as drug shortages, price increases, and disruption of drug supply.
Marc-André and Volesky found that M&A have influened growth in generic firms in recent years. They also noted that M&A facilitated faster access to new markets. This article observed that M&A does not cause generic price increases. Instead, M&A has an effect of reducing the number of manufacturers dealing with a specific drug. Consequently, this results in price increases. Mergers Verses Acquisitions
Satsangi, Suruchi. “MERGERS AND ACQUISITIONS A PRE and POST PERFORMANCE ANALYSIS OF THE SELECTED COMPANIES.” (2018).
Mergers and acquisitions between 1897 and 1904 occurred only between non-competing firms. Acquisitions were frequent between steel, metal, and construction industries. After 1991 businessmen and industrialists refocused on vertical mergers and acquisitions for long-term benefits. This paper aimed to conduct a performance analysis of selected companies before and after mergers and acquisitions. The literature reviewed by Suruchi noted that the majority of companies improved in performance after acquisitions.
The author used explanatory and analytical research in this study. Questionnaires were issued to a total of 150 individuals selected to act as respondents. In one of the data retrieved, the company’s performance decreased after the merger. Another study involving Pakistan banks, Suruchi found no difference between the banks’ performance before and after the merger and acquisition. The data obtained from another study found that mergers and acquisitions resulted in increased profits and decreased EPS, NPM, DPS, and ROCE.
Soundarya, M. Baby, S. Moghana Lavanya, and S. Hemalatha. “Merger and Acquisition of Business Organization and Its Impact on Human Resources.” (2018).
Mergers and acquisitions have proved to be the best approaches to handle the ever-increasing business competition. Different motives push companies to enter mergers and acquisitions, including economies of scale, diversification, gain market entry, economies of scope, cost-saving, and tax exemption. This paper aimed to discuss the issues facing HR in each phase of merger and acquisition. The issue regarding people is the most sensitive but the most ignored in M&A.
According to Baby, Lavanya, and Hemalatha, the issues experienced in the planning phase include the appointment of senior executives and the selection of business partners. The issues that arise during the merger phase include designing the implementation team, retention of critical employees, change management, and employee motivation. The post-merger issues include cultural differences, leadership issues, employee restructuring, and ineffective communication. Better HR practices result in success in mergers and acquisitions.
Diep, B., and T. Anh. “Synergies in merger & acquisition: A case study of SMEs in Vietnam.” Journal of Project Management 5.3 (2020): 189-200.
Organizational leaders believe that merger and acquisition is a key component of corporate strategy. This is because it facilitates cost reduction, increased profitability, and long-term growth. This aimed to assess whether mergers and acquisitions create value for small and medium enterprises in Vietnam. Diep and Anh discussed two types of M&A, namely vertical merger and horizontal merger. The authors used synergies to mean than the whole is by far greater than the sum of its parts. Mergers Verses Acquisitions
Out of the eleven selected key performance indicators, only two were found to correlate with merger and acquisition positively. This means that mergers and acquisitions increased the value of small and medium enterprises. However, a total of six KPIs did not have any effect on merger and acquisition, and the remaining three were even worse. In other words, some small and medium enterprises did not improve in performance, and others deteriorated in performance respectively after merger and acquisition.