企业并购文献综述及外文文献资料.docx

企业并购文献综述及外文文献资料.docx

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企业并购文献综述及外文文献资料

本文档包括改专题的：

外文文献、文献综述

一、外文文献

Financialsynergyinmergersandacquisitions.EvidencefromSaudiArabia

Abstract

Businessestodayconsidermergersandacquisitionstobeanewstrategyfortheircompany'sgrowth.Companiesaimtogrowthroughincreasingsales,purchasingassets,accumulatingprofitsandgainingmarketshare.Thus;thebestwaytoachieveanyoftheabove-mentionedtargetsisbygettingintoeitheramergeroranacquisition.Asamatteroffact,growththroughmergersandacquisitionshasbeenacriticalpartofthesuccessofmanycompaniesoperatingintheneweconomy.Mergersandacquisitionsareanimportantfactorinbuildingupmarketcapitalization.BasedonthreestructuredinterviewswithmajorSaudiArabianbanksithasbeenfoundthatmergersmotivatedbyeconomiesofscaleshouldbeapproachedcautiously.Similarly,companiesshouldalsoapproachverticalmergerscautiouslyasitisoftendifficulttogainsynergythroughaverticalmerger.Firmsshouldseekoutmergersthatallowthemtoacquirespecializedknowledge.Ithasalsobeenfoundthatfirmsshouldlookformergersthatincreasemarketpowerwhilstavoidingunrelatedmergersorconglomeratemergers.

Keywords:

Synergy,MergersandAcquisitions,SaudiArabia

1.Introduction

Thereisamajordifferencebetweenmergersandacquisitions.Mergersoccurbetweensimilarlysizedcompaniesandthecollaborationis"friendly"betweenbothcompanies.However,Acquisitionsoftenoccurbetweendifferentlysizedcompaniesandthepartnershipisusuallyforcedandhostile.

WheelenandHunger（2009）defineamergerasatransactioninvolvingtwoormorecorporationsinwhichstockisexchangedbutinwhichonlyonecorporationsurvives.Inotherwords,thetwocompaniesbecomeoneandthenameforthecorporationbecomescompositeandisderivedfromthetwooriginalnames.Furthermore,anacquisitionisthepurchaseofacompanythatiscompletelyabsorbedasanoperatingsubsidiaryordivisionoftheacquiringcorporation（WheelenandHunger,2009）.Theauthorsalsostatethathostileacquisitionsarecalledtakeovers.

Themainreasonforfirmsenteringintomergersandacquisitions（M&A）istogrow,andcompaniesgrowtosurvive（Akinbuli,2012）.Growthstrategiesexpandthecompany'sactivitiesandaddtoitsvaluesincelargerfirmhavemorebargainingpowerthansmallerones.Afirmsustaininggrowthwillalwayshavemoreopportunitiesforadvancement,promotionsandmorejobstoofferpeople（WheelenandHunger,2009）.Ingeneral,mergersanddifferenttypesofacquisitionsareperformedinthehopeofrealizinganeconomicgain.Forsuchabusinessdealtotakeplace,thetwofirmsinvolvedmustbeworthmoretogetherthaneachwasapart.

AfewoftheprospectiveadvantagesofM&Aincludeachievingeconomiesofscale,combiningcomplementaryresources,garneringtaxadvantages,andeliminatinginefficiencies.Otherreasonsforconsideringgrowththroughacquisitionscontainobtainingproprietaryrightstoproductsorservices,increasingmarketpowerbypurchasingcompetitors,shoringupweaknessesinkeybusinessareas,penetratingnewgeographicregions,orprovidingmanagerswithnewopportunitiesforcareergrowthandadvancement（Brown,2005）.

ManyfirmschooseM&Aasatooltoexpandintoanewmarketornewareaofexpertisesinceitisquickerandcheaperthantakingtheriskalone.Furthermore,M&Ahappenwhenseniorexecutivesfeelenthusiasticandexcitedaboutapotentialdeal;theideaofsuccessfullypursuingandtakingoveranothercompanybeforethecompanyscompetitorsareabletodoso.Competitioninagrowingindustrydrivesfirmstoacquireothers.Infact,asuccessfulmergerbetweencompaniesincreasesbenefitsfortheentirecorporation.

However,failuresalsooccurinM&AasindicatedbyHaberbsergandRieple（2001）andAkinbuli（2012）.Theyshowedthat50%ofacquisitionsareunsuccessful;theyincreasemarketpowerbutdonotnecessarilyincreaseprofits.Brown（2005）explainsthereasonsforthehighfailurerateofM&Aasfollows:

（a）Over-optimisticassessmentofeconomiesofscale.Economiesofscaleareusuallyachievedatcertainbusinesssize.However,expansionbeyondtheoptimumlevelresultsindisproportionatecostdisadvantagesthatleadtovariousdiseconomiesofscale.

（b）Inadequatepreliminaryinvestigationcombinedwithaninabilitytoimplementtheamalgamationefficiently.Resistancetochangeandtheinabilityfortheacquiredcompanytomanagechangewellisamainreasonforfailureduetotheresistanceoftheemployeesandmanagementofbothcompaniesinvolved.

（c）Insufficientappreciationofthepersonnelproblems,whichwillarise,isduemainlytothedifferingorganizationalculturesineachcompany.

（d）Dominanceofsubjectivefactorssuchasthestatusoftherespectiveboardsofdirectors.

Therefore,draftingcarefulplansbeforeandafterthemergerisanecessitythatshouldnotbeoverlooked.Somecompaniesfindthesolutioninhiringachangemanagerwhowilladdvalueandbettermanagethetransitionofthe"marriagebetweenbothcompanies"（Brown,2005）.

2.SynergyinM&Aandfinancialsynergy

ThissectiondiscussestheliteraturereviewinordertoidentifytheimportanceofacquiringfinancialsynergyintheM&A.

2.1SynergyinM&A

Synergy,asdefinedinthebusinessdictionary,isthestateinwhichtwoormoreagents,entities,factors,processes,substances,orsystemsworktogetherinaparticularlyfruitfulwaythatproducesaneffectgreaterthanthesumoftheirindividualeffects.Synergyisthemagicforcethatallowsforenhancedcostefficienciesofthenewbusiness.Synergytakestheformofrevenueenhancementandcostsavings（Mergersandacquisitions:

Definition,n.d.）.

Synergyisalsoexpressedasanincreaseinthevalueofassetsasaresultoftheircombination.Expectedsynergyisthejustificationbehindmostbusinessmergers.Forexample,the2002combinationofHewlett-PackardandCompaqwasdesignedtoreduceexpensesandcapitalizeoncombiningHewlett-Packard'sreputationforqualitywithCompaq'simpressivedistributionsystem（SynergyBusinessDefinition,n.d.）.

Throughresearchithasbeennotedthatsynergyistheconceptthattwobusinesseswillgenerategreaterprofitstogetherthantheycouldseparately（WheelenandHunger,2009）.Synergyissaidtoexistforadivisionalcorporationifthereturnoninvestmentofeachdivisionisgreaterthanwhatthereturnwouldbeifeachdivisionwereanindependentbusiness（WheelenandHunger,2009）.Inordertosucceedcooperationbetweenthepartnersisthebasicingredientforachievinggrowththroughsynergy（Rahatullah,2010）.Thisrequirespartnerstobuildtrust,commitment,andsecureconsensus,toachievetheirtargets（Gronroos,1997;RingandVan-de-Ven,1994）.

Synergycantakeseveralforms.AccordingtoGooldandCampbell（1998）synergyisdemonstratedinsixways:

benefitingfromknowledgeorskills,coordinatedstrategies,sharedtangibleresources,economiesofscale,gainingbargainingpoweroversuppliersandcreatingnewproductsorservices.

M8

However,Brown（2005）summarizesthesourcesofsynergythatresultfromM8

1.Operatingeconomieswhichinclude:

（a）Economiesofscale:

Horizontalmergers（acquisitionofacompanyinasimilarlineofbusiness）areoftenclaimedtoreducecostsandthereforeincreaseprofitsduetoeconomiesofscale.Thesecanoccurintheproduction,marketingorfinancedivisions.Notethatthesegainsarenotexpectedautomaticallyanddiseconomiesofscalemayalsobeexperienced.Thesebenefitsaresometimesalsoclaimedforconglomeratemergers（acquisitionofcompaniesinunrelatedareasofbusiness）infinancialandmarketingcosts.

（b）Economiesofverticalintegration:

Someacquisitionsinvolvebuyingoutothercompaniesinthesameproductionchain.Forexample,amanufacturerbuysoutarawmaterialsupplieroraretailer.Thiscanincreaseprofitsthrougheliminatingthemiddlemaninthesupplychain.

（c）Complementaryresources:

Itissometimesarguedthatbycombiningthestrengthsoftwocompaniesasynergisticresultcanbeobtained.Forexample,combiningacompanyspecializinginresearchanddevelopmentwithacompanystronginthemarketingareacouldleadtogains.Combiningtheexpertiseofbothfirmswouldbenefiteachcompanythroughthegainedknowledgeandskillsthatindividuallytheylack.

（d）Eliminationofinefficiency:

Ifeitherofthetwocompanieshadbeenbadlymanaged;itsperformanceandhenceitsvaluecanbeimprovedbytheeliminationofinefficienciesthroughM&A.Improvementscouldbeobtainedintheareasofproduction,marketingandfinance.

2.Marketpower;Horizontalmergersmayenablethefirmtoobtainadegreeofmonopolypowerwhichcouldincreaseitsprofitability.Coordinatedstrategiesbetweenbothcompanieswillleadtheentireorganizationingainingcompetitiveadvantage.Gainingbargainingpoweroversuppliersisrealizedsincethecompanyislargerinsizeafterthemerger.

3.Financialgains;Companieswithlargeamountsofsurpluscashmayseetheacquisitionofothercompaniesasthebestapplicationforthesefunds.Sharedtangibleresourcessuchassharingabiggerbu