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Motives of Cross Country Mergers
| Displace inefficient mergers |
For gain on the stock market |
| Achieve economies of scale and scope in production, distribution and financing |
To bargain in the private company for sale market |
| Increase monopoly power |
To build managerial empires |
| To make use of tax reduction opportunities |
Prospect of technological or marketing changes |
| Major stockholders wishing to retire |
Attractive purchase or exchange offer |
| Need for further financing |
Means of survival |
Reasons for Failure
While it is not feasible to pinpoint one best practice to carry out transactions, this study suggests that certain patterns and principles observed in transactions do contribute to enhancing the probability of success in a deal as following: -
Unsuccessful Mergers
| Insufficient investigation of the acquired company |
Overbid to acquire control of a company |
| Corporation indigestion: Too many companies acquired in too short a tie in diverse industries |
Loss companies in unrelated fields present greater risks |
| Too broad a diversification |
Faulty financial evaluation of M&A |
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* Contributed by -
Gulbahar Grover,
PGDIM - 11,
NITIE, Mumbai.
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