Refocusing on the Success Enabling Factors in Mergers and Acquisitions

Anthony Okafor

doi:10.19044/esj.2019.v15n16p172

Abstract

Mergers and acquisitions have continued to serve as a primary financing tool undertaken by organizations to achieve corporate objectives. Despite the increased popularity of the mergers and acquisitions phenomenon, determining acceptable metrics for identifying successful mergers and acquisitions continue to pose challenges to investors, financial analysts and other stakeholders involved with mergers and acquisitions. Mergers and acquisitions activities have presented mixed outcomes to different organizations with high failure rates recorded in some and less-significant successes reported in others. Consequently, understanding acceptable metrics for determining a successful merger or acquisition becomes paramount given the challenges experienced by players in that industry. Therefore, a thorough review of the literature is made in this study to identify factors that improve the chances of mergers and acquisitions success. The unique features of successful and unsuccessful mergers and acquisitions are itemized to provide a premise for assessing and evaluating the essential characteristics that make mergers and acquisitions successful. The importance of due diligence, low acquisition purchase premiums, and related business acquisitions in the mergers and acquisitions process were fully explicated. Low acquisition purchase premiums, timing of mergers and acquisitions and related business acquisitions were found to tremendously enhance the success of mergers and acquisitions.

Highlights

In the past five decades, scholars have made significant literary interventions to the mergers and acquisitions phenomenon
Despite the enormous research about Mergers and acquisitions (M&A), there appears to be a gap in literature that accentuates the cause of M&A failure and the unique features about successful M&A
Purpose of study The purpose of this study is to identify and critically evaluate the unique features of successful mergers and acquisitions

Summary

Introduction

In the past five decades, scholars have made significant literary interventions to the mergers and acquisitions phenomenon. Mergers and acquisitions has been identified as means for an organization to achieve growth, diversity, and profitability and this explains the increased level of M&A activities experienced in the last two decades (Ikhwan & Haeruddin, 2017). Despite the enormous research about M&A, there appears to be a gap in literature that accentuates the cause of M&A failure and the unique features about successful M&A. This has increased calls by scholars and practitioners involved with M&A to identify the essential elements that make successful M&A standout. Purpose of study The purpose of this study is to identify and critically evaluate the unique features of successful mergers and acquisitions. Attempts are made to discuss the challenges of M&A and ways to enhance the selection process to improve the success rate of M&A transactions

Literature Review Understanding Mergers and Acquisitions

Findings

Conclusion