Mergers and

Acquisitions

Presented by:

BIG IT JOBS
(DIV: BIG IDEAS HR CONSULTING PVT. LTD.)

What is MERGER?
A transaction where two firms agree to integrate
their operations on a relatively co-equal basis
because they have resources and capabilities that
together may create a stronger competitive
advantage.
Example:
Company A+ Company B= Company C.

MERGER
Case study- NTT DoCoMo
and Tata

What is ACQUISITION?

It also known as a takeover or a buyout

It is the buying of one company by another.
In acquisition two companies are combine together to form a
new company altogether.

Example:
Company A+ Company B= Company A.

ACQUISITION
Case study- Tata Steel and Corus

THE FIRST CLASSIFICATION

ACQUISITION

PUBLIC (IF ACQUIREE

LISTED IN PUBLIC
MARKETS)

PRIVATE (IF ACQUIREE

NOT LISTED IN PUBLIC
MARKETS

THE SECOND CLASSIFICATION

ACQUISITION

FRIENDLY

HOSTILE

Why Mergers And Acquisition are

done??
Mergers and Acquisitions are pursued for a variety
of reasons:
1.Economies of scale in operations
2.Consolidation in saturated markets
3.Improving competitive position through larger asset base

DIFFERENCE BETWEEN MERGER AND

ACQUISITION

ACQUISITION

MERGER
i.

Merging of two organization in

to one.
ii. It is the mutual decision.
iii. Merger is expensive than
acquisition(higher legal cost).
iv. Through merger shareholders can
increase their net worth.
v. It is time consuming and the
company has to maintain so
much legal issues.

i.

Buying one organization by

another.
ii. It can be friendly takeover or
hostile takeover.
iii. Acquisition is less expensive
than merger.
iv. Buyers cannot raise their
enough capital.
v. It is faster and easier
transaction.

Why Mergers and Acquisitions Fail?

Cultural Difference
Flawed Intention
No guiding principles
No ground rules
No detailed investigating
Poor stake holder outreach

MERGER:WHY & WHY NOT

WHY IS IT IMPORTANT
i. Increase Market Share.
ii. Economies of scale
iii. Profit for Research and
development.
iv. Benefits on account of tax
shields like carried forward
losses or unclaimed
depreciation.

PROBLEM WITH MERGER

i. Clash of corporate
cultures
ii. Increased business
complexity
iii. Employees may be
resistant to change

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ACQUISITION:WHY & WHY NOT

WHY IS IMPORTANT
i. Increased market share.
ii. Increased speed to market
iii. Lower risk comparing to
develop new products.
iv. Increased diversification
v. Avoid excessive
competition

PROBLEM WITH ACUIQISITION

i. Inadequate valuation of
target.
ii. Inability to achieve
synergy.
iii. Finance by taking huge
debt.

Impact of Mergers and Acquisitions

Employees

Shareholders

Competition

Impact

Public

Management

MOTIVES OF MERGERS AND ACQUISITIONS

Economy of scale:
This refers to the fact that the combined company can often reduce its fixed costs
by removing duplicate departments or operations, lowering the costs of the
company relative to the same revenue stream, thus increasing profit margins.

Economy of scope:
This refers to the efficiencies primarily associated with demand-side changes,
such as increasing or decreasing the scope of marketing and distribution, of
different types of products.

Synergy:
For example, managerial economies such as the increased opportunity of
managerial specialization. Another example are purchasing economies due to
increased order size and associated bulk-buying discounts.

How to Prevent the Failure

Continuous communication employees, stakeholders,
customers, suppliers and government leaders.
Transparency in managers operations
Capacity to meet new culture higher management
professionals must be ready to greet a new or modified

culture.
Talent management by the management

THANK YOU