Strategic Mergers Research Articles

How TRUST is both the driver and inhibitor in not-for-profit sector growth strategies: The "Lived" experience of Merger and Acquisition

This research is a case study based on the "lived experience” of two not-for-profit organisations wanting to create synergies and efficiencies in back office operations and to increase the offerings of services to existing clients by joining together as one business unit. This research has followed the different stages of the proposed merger or acquisition from the initial signing of the Memorandum of Agreement (MOA), to the strategic planning for the new entity including the potential organisational structure, board structure and executive team recruitment. The negotiations have varied from the rejection of a takeover, to the proposal of a merger, to the eventual decision for the larger organisation to “acquire” the smaller organisation. These decisions were deliberated at great length by both organisations, but the clear driver in all negotiations was TRUST. Trust that at all times the outcomes should benefit clients, trust that the new Board would be represented in equal parts by both of the organisations and trust that the new senior executive team of the single entity would utilise the efficiencies gained to sustain the organisation. But this trust also became an inhibitor at times, where trust was used as an excuse to not carry out all due diligence governance processes (DDGP). This lived experience has shown that Trust is indeed an important factor in any proposed merger or acquisition but will never replace DDGP. In fact DDGP enhanced trust, and enabled for more transparent decisions to be reached by both parties at the negotiation table. The not-forprofit sector can learn a great deal from this case study that shows the benefits of societal needs of their clients in aged care, disability and transport by a merger or acquisition. It should be used by other not-for-profit organisations to put into practice strategic merger and acquisition processes to create an organisation that is run efficiently and for the benefit of their clients, with a combination of trust and DDGP. Keywords: Strategic Merger; Acquisition; Trust; Due Diligence; governance; lived experience;

In Search of Complementarity in China’s Innovation Strategy through Outward Strategic Mergers and Acquisitions Policy: A Behavioural Additionality Approach

Chinese policymakers have witnessed great efforts in building indigenous innovation-led economy as well as a deep interest in promoting outward strategic mergers and acquisitions (M&As) as a major approach to acquire advanced technological know-how. Although debates take place regarding whether the governmental promotion of strategic M&As has an impact on the particular responsiveness of Chinese enterprises in terms of innovation activities, most studies use input or output additionality approaches that directly measure either the additional investment in innovation or the innovation output in the form of commercial benefits. The adoption of these approaches has led to inconclusive results. In this article, we assess the relationship between the governmental promotion and enterprises’ responses using a behavioural additionality approach. The findings show that China’s outward strategic M&A policy is likely to increase enterprises’ willingness to venture abroad, extend their international innovation networks, change their focus on innovation and, last but not least, enhance the learning capacity of Chinese government. We conclude that outward strategic M&As is an avenue to achieve the innovation-led economy in China.

Industry 4.0 and the need for talent: a multiple case study of Taiwan's companies

Talent is a key resource in the development of Industry 4.0. However, scholars have not considered talent from the viewpoint of companies. We address this omission by using a multiple case method, including semi-structured interviews and document reviews, to analyse companies' need for talent and its acquisition. We find that companies need talent in the areas of lean management, the Internet of things (IoT), cloud computing, and big data. Moreover, companies obtain talent using external resources such as strategic alliances, mergers and acquisitions, and outsourcing. We also establish that Industry 4.0 implementation does not affect job numbers; however, companies must adjust their talent development practices.

Strategic Merger through the Backdoor Listing: Kakao and Daum Case in IT service industry in Korea

Strategic Merger through the Backdoor Listing: Kakao and Daum Case in IT service industry in Korea

Learning from giants: Early exposure to advance markets in the growth and internationalisation of Spanish health care corporations in the twentieth century

This article examines the influence of early exposure to advanced markets of the United States and Germany in the growth and internationalization of health care firms from Spain, a late industrialised country. Based on the case studies of the Spanish corporations Grifols and Ferrer, the study shows that early exposure to advanced markets helped them grow in their national markets, and in the world health care industry. It shows further that the specific capabilities developed by both firms were determined by path-dependent networks with scientists and institutions, on the one hand; and strategic alliances, acquisitions and mergers with German and US corporations on the other.

Stock price informativeness on the sensitivity of strategic M&A investment to Q

Using a strategic merger sample that covers the period from 1985 to 2011, we find that the acquirer’s stock price firm-specific information, the new information created by investors about the value of firm fundamentals, increases the positive sensitivity of strategic merger investment to the acquirer’s Q; the target’s stock price firm-specific information increases the negative sensitivity of merger investment to the target’s Q. These results suggest that managers learn from financial markets in identifying strategic merger investment opportunities by transferring assets from poorly managed firms to well managed firms. In addition, the target’s stock price firm-specific information itself increases the acquisition size, indicating that informed acquirer managers are more likely to take out large merger investment. Last but not the least, stock price informativeness increases merger synergies and post-merger performance, suggesting that informed managers make better merger investment that increases shareholder value. Our study contributes to the recent increasing stream of studies on managerial learning from the market.

O Processo Decisório Estratégico em Fusões e Aquisições: a perspectiva das empresas adquiridas do sul do Brasil

This study aims to analyze how the Strategic Decision-Making Process (SDMP) occurs in organizations from the perspectives of acquired companies in processes of Mergers and Acquisitions (M&A). The study includes checking the motives influencing the SDMPs from the perspective of the companies acquired, identifying the stages of SDMPs in those M&A, as well as analyzing the convergence of strategic decisions of M&A processes analyzed under the SDMPs’ approaches found in literature. The research was conducted through the adoption of multiple case studies on strategic decisions related to M&A processes, so that it would search for a replication of the phenomena studied. Characteristics from more than one approach among those analyzed in this study can be observed. The analysis identified how the process of mergers and acquisitions occur from the viewpoint of the acquired companies as well as what are the steps that strategic decision-making processes undergo in these situations. Furthermore, from the literature, the approaches related to strategic decision-making that most occur in such situations was found. Understanding how such approaches occur in the course of strategic decision-making processes allows understanding more clearly how the decision makers, under uncertainty, loss risk, or insecurity surrounding these situations, tend to act. Keywords: Strategic Decision-Making Process, Mergers and Acquisitions, Acquired companies.

Valuing synergies in strategic mergers and acquisitions using the real options approach

The purpose of the current paper is to elaborate the model for assessing cumulative synergetic effect in M&A (Mergers and Acquisitions) deals on the basis of a real options approach. The majority of papers on the synergetic effects of M&A deals typically focus on a particular type of synergy, while the current paper proposes a model that accounts for the cumulative simultaneous effect of different types of operating and financial synergies. The methodology of our research is loosely based on Datar-Mathews real option valuation model, which is flexible and intuitive for practitioners. Formulae for assessing eight types of synergy typically arising from M&A deals are developed. They are integrated into a single model to assess their cumulative effect on the M&A deal using a simulation modelling approach. The method was used ex post to find synergy values in two recent M&A deals in the pharmaceutical industry, and produced sound results. The proposed approach to value target companies could be used by firms before an M&A deal in the due diligence process. Using this tool a company can build a bidding strategy and define the maximum premium it can pay for the target.

Cu/Pd Synergistic Dual Catalysis: Asymmetric α-Allylation of an α-CF3 Amide.

Despite the burgeoning demand for fluorine-containing chemical entities, the construction of CF3 -containing stereogenic centers has remained elusive. Herein, we report the strategic merger of CuI /base-catalyzed enolization of an α-CF3 amide and Pd0 -catalyzed allylic alkylation in an enantioselective manner to deliver chiral building blocks bearing a stereogenic carbon center connected to a CF3 , an amide carbonyl, and a manipulable allylic group. The phosphine complexes of CuI and Pd0 engage in distinct catalytic roles without ligand scrambling to render the dual catalysis operative to achieve asymmetric α-allylation of the amide. The stereoselective cyclization of the obtained α-CF3 -γ,δ-unsaturated amides to give tetrahydropyran and γ-lactone-fused cyclopropane skeletons highlights the synthetic utility of the present catalytic method as a new entry to non-racemic CF3 -containing compounds.

Cu/Pd Synergistic Dual Catalysis: Asymmetric α‐Allylation of an α‐CF3 Amide

AbstractDespite the burgeoning demand for fluorine‐containing chemical entities, the construction of CF3‐containing stereogenic centers has remained elusive. Herein, we report the strategic merger of CuI/base‐catalyzed enolization of an α‐CF3 amide and Pd0‐catalyzed allylic alkylation in an enantioselective manner to deliver chiral building blocks bearing a stereogenic carbon center connected to a CF3, an amide carbonyl, and a manipulable allylic group. The phosphine complexes of CuI and Pd0 engage in distinct catalytic roles without ligand scrambling to render the dual catalysis operative to achieve asymmetric α‐allylation of the amide. The stereoselective cyclization of the obtained α‐CF3‐γ,δ‐unsaturated amides to give tetrahydropyran and γ‐lactone‐fused cyclopropane skeletons highlights the synthetic utility of the present catalytic method as a new entry to non‐racemic CF3‐containing compounds.

A new approach to measure the outcomes of university mergers

Strategic alliances and mergers (SAMs) are well-known organisational instruments to increase the pool resources, competitive advantages, strengthen the power and strategic positioning for achieving synergy effects (SEF). This study aims to explore and measure the possible SEF of mergers using the 5Qs approach. Data for this study was collected from questionnaires. The data was analysed using a multiple regression model in order to test the effect of the independent variables related to mergers and the dependent variable of SEF. The results indicate that not all qualities were significant but the infrastructure-oriented construct (INFRA) and the process-oriented construct (PROC) are the most significant in the regression models for obtaining better SEF of the merger relationship. The study extracts the valuable lessons that might help others to effectively utilise mergers and strategic alliances between corporations and higher education institutions.

Cherry Picking or Depth-Oriented Strategic Investing? Evidence from SRI Activity

Today, socially responsible investing (SRI) represents the youngest financial-services industry that investors can exploit to implement their investment strategies. Although literature in this field is growing, additional research is needed to disentangle the factors affecting the performance of SRI funds. This paper focuses on the analysis of the influence that the depth of investment strategy by SRI funds may have on the investment performance, whereas larger SRI funds have a stronger capacity to address their investment choices. We used a sample of 149 USA SRI funds referring to the Social Investment Forum (SIF) Foundation in the period 2005-2010. We found that depth of investment strategy decreases the capacity of large SRI funds to reach positive financial returns if a broad sustainability investment strategy is pursued. On the other hand, SRI funds able to focus the attention on specific environmental, social, governance, or product criteria do increase their capacity to reach positive financial performance. This paper contributes to the existing literature by examining the depth of the sustainability investment strategy by SRI funds and investigating the moderating effect that peculiar investment strategies have on the well-known relation between size and performance of SRI funds. major-bidi;mso-bidi-theme-font:major-bidi;mso-ansi-language:EN-GB;mso-fareast-language: ZH-CN;mso-bidi-language:AR-SA'>This paper analyzes the wealth distribution taking into account the reaction of the market to the alliance as an indicator of a successful strategy. It explores the case of the automobile industry, which is characterised by a high use of inter-firm cooperation, such as strategic alliances and mergers & acquisitions, to effectively compete in the global market and face the global crisis.

Strategic Alliances between Japanese-Western Companies: A Win-Win or Win-Lose Relationship? The Case of the Automobile Industry

<p>Inter-firm cooperative arrangements involving flows and linkages that use resources and/or governance structures from autonomous firms based in different countries help in accomplishing both the individual objectives and the collective ones. Through collaboration with foreign partners, firms are able to exploit new market opportunities, minimise investment risks, set up more efficient and effective distribution channels or create products, product features, brands or services and, above all, absorb key capabilities and technologies from the partner. Literature on strategic alliances raised the issue on an alleged appropriation of benefits by Japanese firms when participating in strategic alliances. Japanese companies have experienced higher shareholders’ returns in strategic alliances with Western partners, both in the short term and in the medium one. The choice of Japanese and Western companies calls for a deeper understanding of the drivers of the alliances and the determinants of value creation without misleading influences deriving from different business environments.</p>This paper analyzes the wealth distribution taking into account the reaction of the market to the alliance as an indicator of a successful strategy. It explores the case of the automobile industry, which is characterised by a high use of inter-firm cooperation, such as strategic alliances and mergers & acquisitions, to effectively compete in the global market and face the global crisis.

Analysis of an Acquisition in the Banking Sector: Banamex and Citigroup

The Mexican banking sector during 90´s it has had transitions from private to public and to private again, and it is one of the main sectors which have received Foreign Direct Investment (FDI), mainly from Spain. In this regard the main aim of this paper is to analyze the acquisition of Banamex by Citigroup. In order to reach this aim a case analysis method was carried out. The results suggests that Citigroup invested in Banamex for consolidate its presence in Latin America, the profits in Mexico, imitate the Spanish banks that some years ago have invested in Mexican banks, the banking sector in Mexico was deregulated as consequence of neoliberal policies and the potential market that represent Mexico, finally the acquisition of Banamex allowed competition in the banking sector and the entry of new competitors in the industry. t peculiar investment strategies have on the well-known relation between size and performance of SRI funds. major-bidi;mso-bidi-theme-font:major-bidi;mso-ansi-language:EN-GB;mso-fareast-language: ZH-CN;mso-bidi-language:AR-SA'>This paper analyzes the wealth distribution taking into account the reaction of the market to the alliance as an indicator of a successful strategy. It explores the case of the automobile industry, which is characterised by a high use of inter-firm cooperation, such as strategic alliances and mergers & acquisitions, to effectively compete in the global market and face the global crisis.

Strategic merger decisions across business cycles: Evidence from bidders' time-varying appetite for operating leverage

In this study, we examine how bidders' appetite for their targets' operating leverage affects merger activities, and whether this appetite varies throughout the business cycle. We find that the association between a firm's operating leverage and the likelihood of it becoming a target or an acquirer—as well as the deal premium, the bidder's cumulative abnormal returns around the deal announcement date, and the bidder's long-run buy-and-hold abnormal returns—depend on the business cycle. The time-varying effects of operating leverage on merger decisions are strategic and consistent with their time-varying benefits and costs.

Multimarket Exit, Strategic Merger, and Collusion

We study the duopoly exit equilibrium in a multimarket environment with declining demand, and investigate the roles of strategic merger, agency cost, and collusion in a multimarket exit game. Cross-market spillovers with endogenous duration and the strategic merger of outside firms can serve as sources of commitment in a multipoint war of attrition, and might help large firms successfully force their smaller rivals out. Agency cost can be beneficial in bolstering strategic commitment in declining markets. Under certain conditions, multimarket contact might facilitate collusion in a multimarket exit game where firms yield a market to each other reciprocally.

Do Strategic Corporate M&A Create Value? Evidence from 5th and 6th Merger Waves

Corporate strategic Mergers and Acquisitions (M&A) mean focus on growth (e.g. revenue growth) and aim to enhance the firm's competitive position. The academic literature reports however, an extremely high failure rate of strategic M&A – their outcomes are very difficult to forecast and they are extremely risky. Complexity increases even further, if we add the international perspective. At the same time, the empirical evidence states that M&A contribute to one third of the average corporate growth rate. So, how can we make them value-creating? The present study focuses on the analysis of exogenous determinants and their impact on value-creation in strategic acquisitions for growth and explains which factors are relevant for the evaluation of acquirers’ performance. Furthermore, it provides real examples of the value-creating and value-destroying transactions, explaining the strategy behind its success or failure.

Innovation Intellectual Property Rights in India Post 1995 WTO: Case Study of Pharma Industry in Mumbai

The study covers the issues like: understanding the structure, growth, characteristics and current issues of Indian pharmaceutical industry; How drug manufacturers have been coping with TRIPS Regulations (post 2005) in India like ‘product patents’ and what threats and opportunities they are visualizing in future?; The ‘product patent’ implications on Pharmaceutical Industry on issues like its influence on mergers/acquisitions, labour issues (skilled labour attrition) and RD and its probable effect (as expressed by manufacturers) on public health and drug pricing are dicussed. There is a clear difference in the impact of the TRIPs on size of the firms. Small and medium scale firms having less capacity to invest in R&D are concentrating on Bulk Drug production and export market by improving the quality of deliverables. Whereas the Large scale firms feel the need to expand the R&D investment and collaborate with foreign firms to survive in the market. Most of the large firms are also involved in strategic Mergers and Takeovers and at the same time they are also threatened by the fear of being taken over. However there is a long way to travel for our Indian Pharma Companies to become leaders in Global Pharmaceuticals as the R&D investment is yet to match the global standards.

Factors Affecting the Decision to Merge: The case of strategic mergers in Norwegian higher education

Much research has been undertaken to investigate the cultural, structural and, to some extent, the economic effects of mergers in higher education. However, surprisingly little research has been done on why higher education institutions decide to merge. This article identifies and discusses a number of structural factors that may play a role when reaching a merger agreement. By drawing on a series of merger initiatives in Norwegian higher education, the article shows that merger processes involving more than two institutions dramatically reduces the chances of reaching a merger decision, and that a number of other factors may also play a negative role. The article concludes by reflecting upon the complex conditions surrounding strategic merger processes, and by identifying some practical implications for institutions involved in merger processes.

MULTINATIONAL STRATEGIC ALLIANCES: A LEBANESE PERSPECTIVE

ABSTRACT In the present globalization environment, firms compete to enter new markets in search for profitability. The process has become very complex and competitive unless efficient strategic mergers and acquisitions are skillfully researched, evaluated, and consumed. Businesses focus on research and development, resources availability, skilled human resources and personnel, as well as on a favorable, socio-economic, and legal environment. Lebanese businesses are in constant search for qualified partners to investigate entering into strategic alliances, devise proper planning and achieve a competitive advantage. This paper explores the potentials to form strategic alliances with European business partners focusing heavily, and in depth, on highlighting and analyzing the essential requirements for the success of such ventures. While it outlines the advantages and positive projections, it also reflects on any pitfalls that might arise, due to the incompatibility of the partners, within a multicultural international tapestry. The research methodology will review theories and writings by recognized scholars in the field in order to clarify the entailments related to strategic management and alliances between Lebanese and European firms. Semi-structured interviews are conducted with professionals in several sectors including industry, banking, insurance, real estate, tourism, and others. Keywords strategic alliance, partners, positive projections, strategic management