Merger and Acquisition Strategies

Merger and Acquisition Strategies

How to Create Value

New Perspectives on the Modern Corporation series

Angelo Dringoli

The decision to carry out a merger or acquisition is certainly a risky one, not least because of the number of variables influencing the final outcome. It is also a decision frequently based on the wrong objectives and an incorrect evaluation process. With this in mind, this important new book offers solutions for reducing the high percentage of mergers and acquisitions (M & As) that fail. It adopts a normative approach, using theoretical analysis to show what managers could and should do to increase shareholders’ value through successful M & A strategies. It also explores the conditions that are suitable for favouring a certain type of M & A (horizontal, vertical or diversified) over the others. In conclusion, the book presents case studies of successful M & A strategies providing a link between theory and practice.

Chapter 3: Making M & As create value: an analytical model for evaluating M & As

Angelo Dringoli

Subjects: business and management, strategic management, economics and finance, industrial organisation

Extract

The high percentage of failures highlights the need to define more precisely the purpose of an M & A and use more effective models for evaluating and managing M & As. To offer a contribution for reducing the percentage of failures in M & As, we believe it is necessary, first of all, to acknowledge that the ultimate aim of a corporation is to create value for its shareholders. Then, it is necessary to define analytical models and procedures suitable for properly evaluating and implementing M & As to create value. With this in mind, we will analyse the general conditions necessary for reaching this objective.

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