MERGERS AND ACQUISITIONS

Mergers and Acquisitions

Mergers and Acquisitions

Introduction

The purchase of a company by another (acquisition) or the union of two companies, leading to a larger one (melting) are one of the most frequent ways to win today and competitiveness dimension. Generally, this type of business operations is caused by the identification of a threat or an opportunity in the market. We are now in the heyday of such operations, both globally and domestically. In the year, 2006 exceeded even the last record, dated in 2000 and grounded in the technology bubble. This time, pressures to the sale or merger of companies come from different factors. Initially, the boom in the economy and the positive development of the stock when the stock goes up, companies are worth more and thus can increase their capacity borrowing to acquire other companies. Moreover, with low interest rates (Which enable companies to assume a higher level of borrowing to meet the trading companies, increasing their ability to pay) have led to the liquidity of the companies is very high. On the other hand, opening of markets and globalization have strengthened competition that firms face, which must compete with other cost, size and technological capacity (Barney & Hesterly, 2012, pp. 33-42). In addition, the venture capital boom has increased the possibilities for business investment. In Spain, in addition to the factors already mentioned, there is the peculiar situation of that due to the large proportion of companies established after the civil war (50's and 60), a large number of entrepreneurs approaching retirement age, why which are forced to sell his company. In the event that the company belongs and the second or third generation (the generation "cousins"), lack of interest or agreement between them may lead to the dissolution of the company. Furthermore, the upcoming launch of an alternative stock market for SMEs will provide participating companies with greater liquidity. That drive a sale more quick business. 

Discussion

Faced with the phenomenon of globalization of the industry and markets, companies in developed countries have adopted a new strategy of internationalization. The establishment in foreign countries, through the creation of subsidiaries, branches, or representative offices, should less to companies looking to conquer a new short-term market shares for quick access to a size deemed optimal face global competition. However the merger or acquisition of local firms allows them to solve problems such as setting up a distribution network, staff training.

Local businesses are now operating in an environment of increased competition with market share tends to be restricted and unpredictable changes and frequent, are forced to circumvent this phenomenon through a consolidation movement. For this reason, this method of concentration appears as a solution ensuring their sustainability and growth. Mergers were then increased around the world in a short period of time, money increasingly important was at stake, and businesses increasingly large are involved in the process (Duksaite, 2009, pp. 21-31).

If there has been a multitude of mergers, all does not increase performance. In addition, if some failures can be explained by financial factors or commercial, a considerable ...