CROSS BORDER ACQUISITIONS

Cross Border Acquisitions



Cross Border Acquisitions

Introduction

During the past few years, as network technologies and communication infrastructure continue to progress, Mergers and Acquisitions (M&As) have become a growing trend for companies. All type of companies including large, small, domestic, and foreign are engaged in forming strategic alliances within their particular industries. Also, Cross border mergers or acquisitions (also known as Internationalisation) have sharply increased, as a result of financial recessions, market uncertainty conditions, government policies and cross border agreements. There are various goals that companies look to achieve by local or cross border acquisitions, but the main is to assure the long-term and beneficial growth in terms of profit. However, some serious issues exist and need to be properly resolved for a successful merger and acquisition. In this essay, we will discuss some main issues of cross border acquisitions, and examples of companies which created cross border acquisitions. We will also critically analyse the role played by particular mergers for the progress of the business

Discussion

Mergers and Acquisitions

In today's advanced and connected world, (M&As) have become an everyday's event in the business world (Shimizu K., et.al, 2004, pp.307). Firms use these strategies to strengthen their market position.  M&As are the best source for company to respond the changing market situations (Bruner R.F., 2004, pp.12). The main motivation behind any merger is to maximise the shareholders wealth. Companies always perform such mergers in which both parties are benefited. The terms Merger and Acquisition are often used alternatively, while there is a significant difference between the two. Merger is, when two companies jointly create a new corporation. As a result of merger, a single corporate structure is developed, but its original identity still remains. On the other hand, an acquisition is when one company buys another company, the existing problems are dissolved and a totally new company is formed. An acquisition is different from a merger in the sense that it involves resolving of major problems, and an entirely new company is produced, which is profitable and agreeable for both the companies.

Two firms generally merge in the situation, when combining them increases the value in the thoughts of the managers who are going to acquire. M&As can be deployed in order to replace an inefficient management, but most of the times the two businesses become more valuable together than separate.

M&As are considered to be in best interest of both companies; however, there are many steps that need to be taken by the company to make the merger or acquisition successful. For Example in many cases, Human resource departments of the firms are not involved, while for a successful merger and a positive outcome, this department needs to be involved from the very beginning phase. Acquisitions are mainly of two types, domestic and cross border. In the next section, we will discuss cross border acquisitions and the associated advantages and disadvantages.

Cross Border Acquisitions

For the case of cross-border M&As, the firms are registered in two different ...