Motivators and Success Strategies of Merger and Acquisition

Mergers and acquisitions (M&A) and corporate restructuring are a big part of the
corporate finance world. The phrase mergers and acquisitions (abbreviated M&A) refers
to the aspect of corporate strategy, corporate finance and management dealing with the
buying, selling and merging of different companies. Although international mergers and
acquisitions constitute the most frequently used means through which multinational
corporations undertake foreign direct investment, the majority of these transactions are
not successful. Existing studies on International Mergers and Acquisitions (IM&As) take
mostly a finance or economic perspective, measuring the outcomes of IM&As in the
short term while ignoring their long-term returns and non-financial factors.
Most literatures focus on the statements and explanations of the reasons of
merger, but without using empirical model and data to further merger motivations
analysis. However, mergers should not be performed between the banking, insurance, and
securities industries merely for the sake of merging. The reasoning behind mergers of
companies needs to be understood. The majority of past studies on the potential reasons
behind mergers have generally utilized theoretical explanations and hypothetical
explanations.
Conventional wisdom tends to hold that differences in business cultures are often
a major obstacle in M&A-related activities. The high rate of failures has been associated
mainly to the fact that M&As are still designed with business and financial fit as primary
conditions, leaving psychological and cultural issues as secondary concerns. The wider
cultural gap and the current trend of IM&As between developed and developing countries
increases the urgency of understanding the effects of culture on the dynamics of IM&As
and on issues such as corporate governance and local adaptation strategy. Cultural
differences affect our view of business and management and, consequently, the outcome
of IM&As. When complementary to the objectives of an IM&A, cultural differences may
be an asset.
The present research is designed in response to this shortcoming, to find out the
motivators of IM&A, examine the effects of culture on the outcome of IM&As. For the
research, the mergers and acquisitions during the period the period of 2005-2009 are
studied. The factor analysis test is used to analyze the motivating factors.

Objective of the Study:

1. To identify the reasons/motivators of mergers and acquisitions.
2. To study the effect of cultural differences in International M & As.
3. To analyze the output of merger and acquisitions.
4. To derive the success strategies for M & As.

Authors:

Prof. Yogita Sure Prof. Anup Suchak

Lecturer, CIBMRD, Nagpur. Lecturer, CIBMRD, Nagpur.
M-9923038591 M-9823814950
Email yogitasure@rediffmail.com Email- anupsuchak@gmail.com