INTERNATIONAL BUSINESS

Global Merger & Acquisition

Global Merger & Acquisition

Introduction

In companies whose owners are both managers of the same arises problem called "agency" as the objectives of managers and shareholders may not coincide. In general, shareholders or owners of a company wishing maximize shareholder value. However, the challenges are multiple managers, and maximize the value of the company is just one of them be equally profitable and growth, the power to reach the company or even himself. Based on the alignment of the interests of both agents, the reasons may lead a company to effect a merger or acquisition with another (s) can be divided into three groups, the first based on rational behavior of managers and two in irrational behavior: Achieve synergies (operational or financial) between the companies involved, to maximize shareholder value, whose goals are aligned with the managers. This is the neoclassical argument of M & A. Act as a corrective mechanism in the market (Meeker, 2008, pp. 303).

Even when the interest of both agents is the same, managers may act in ways that not maximize shareholder value, which the market detects and punished, thus decreasing the value of the shares. May occur by various reasons: or to increase earnings per share: focus only on this objective short term without considering the future implications of the strategy may limit business prospects. or Speculation: given the existence of market imperfections, which produce noise around business valuation, some companies are undervalued. An insider manager can acquire the company and benefit from the difference in ratings. or defensive strategy during periods of stagnation and returns small: they use the F & A to increase market share and give image of strength, but often fails, either because of poor management post-operative or pre-operating overvaluation of the company acquired (the expected synergies fail to happen). or overconfident managers: (generated by their actions Recently, by the media and his personality), which attribute the mispricing of the company by the market to inefficiencies thereof is strengthened by the lack of monitoring Board of Directors of the company, Increase growth or power of company and exacerbating the difference in objectives between managers and shareholders. The F & A can also be motivated for reasons of personal nature manager (Law Business Research, 1999, pp. 143).

Mergers and acquisitions as a tool for business growth Directorate General of SME Policy within the neoclassical arguments for mergers and acquisitions highlights operational synergies and financial synergies, which cover different aspects: - Productive synergies: o Reduced costs: through economies of scale and scope, a more efficient management, and pricing power (both to buy and to sell). This is more common in horizontal M & As. Integrations Vertical cost reduction is mainly due to a logistics management more efficient. o Improved revenues strategic benefits and resources complementary (Reed & Lajoux, 1999, pp. 96).

Growth: allowed to grow in today's market or enter new ones. In the 90's, the expected potential growth technology companies this gave them a higher value than real, which ...