The Motivation Behind Corporate Acquisitions And Mergers Finance Essay

The Motivation Behind Corporate Acquisitions And Mergers Finance Essay Research that considers the motivation for corporate acquisitions takes essentially two forms. There are studies that concentrate on providing a theoretical analysis based on economic and behavioral theories and those which subject the theories to empirical tests. Friedrich Trautwein (1990) provides a critical review of the predominant theories of merger motives and merger prescriptions. the theories of merger can be categorized into seven groups : efficiency theory, monopoly theory, valuation theory, empire-building theory, process theory, raider theory and disturbance theory. 7 Motivations for MA: à ¢Ã¢â€š ¬Ã‚ £ Monopoly Theory: Gaining market power. à ¢Ã¢â€š ¬Ã‚ £ Efficiency Theory: Operating synergies, financial synergies and Management synergies. à ¢Ã¢â€š ¬Ã‚ £ Valuation Theory: Bidder managers have better information about the targets financial performance than the stock market. à ¢Ã¢â€š ¬Ã‚ £ Empire Building Theory: Planned and executed by managers who Maximize their own utility instead of their shareholders value. à ¢Ã¢â€š ¬Ã‚ £ Process Theory: Mangers have only limited information and base Decisions on imperfect information. à ¢Ã¢â€š ¬Ã‚ £ Raider Theory: Managers creating wealth transfers from the stockholders of the companies they bid for. à ¢Ã¢â€š ¬Ã‚ £ Disturbance Theory: Merger waves are caused by economic disturbances. Why Are There So Many Mergers and Acquisitions? The most important motivation engaging in an MA is to assure the existence or the continuity of the firms activity. If all the major competitors become bigger through the MA transactions, then a firm may take on in an acquisition to ensure competitive parity. Profits left for a firm after investing in all current positive net present value opportunities is the firms free cash flow. The free cash flow can amount to billions of dollars. For example, Microsoft is reported to have had a free cash flow of $45 billion in 2004! Dominant firms in mature businesses often find themselves in such situations. For firms with free cash flow the obvious decision should be to invest the money in MA activity because such transactions may at least generate competitive parity. Today many businesses recognize the uncompromising demand to seek merger and acquisition transaction, to seek growth and profits. In the strategy literature acquisitions are explained by two main classes of theories: first is the value-maximizing theories and secondly is the managerial theories (Seth1990a). Merger and acquisition literature suggests that managers do have various motives for mergers (Trautwein, 1990). Managers may have personal goals and ambition that differ from the strategy and the need of the firm. At times the managers shareholder conflict arise during the mergers and acquisition transactions. These motivations originate from the ambition to get rich and securing their position hence reducing the risk of the firms bankruptcy. Managers may be motivated to engage in MAs even when such operations do not benefit the entity because acquisition is the fastest and the easiest way to expand the scope of their control. In the context of MA activity, this means that managers may engage in an MA even when there is zero economic value for bidding firms. The argument made by managers here is that they can perform better than the managers of the target firm. Examining the phenomenon of mergers and acquisitions what is the driving force behind it? Mergers and acquisitions is reaching record braking levels, The 1980s and 1990s were characterized by a rash of mergers and acquisitions (MA) with both domestic and foreign partners. The wave of mergers during recent years has drawn widespread attention because The fact that some firms create positive economic value in MA activity spurred some firms to pursue such transactions. In the 1990s we saw a number of mega-mergers between multinationals-for example, DaimlerChrysler and Exxon-Mobil- CitiCorp and Travelers Group, MCI and WorldCom, Hewlett-Packard and Compaq which changed the entire competitive environment of their respective global markets. These high-profile corporate  mergers  become an great example for any corporation considering a potential acquisition. The 1990s also saw the rise of privatization of enterprise in many emerging markets, creating growth opportunities to gain access to previously closed markets of enormous potential. Looking into the mergers and acquisition literature, merger motives do not play a significant role; MA give out more merger consequences than theoretical effort (Trautwein, 1990). In fact, taking into consideration the work of Allen et al (2002) that was based in Trautwein (1990) findings and assumptions, most observers agree that mergers are motivated by a complex pattern of motives and that no single motive or method can provide a full explanation (e.g. Steiner, 1975; Ravenscraft and Scherer, 1987). Such motives include increasing profitability, the pursuit of market power, and marketing economies of scale, cost reductions and creation of barriers to entry. What is the true motivation for cross-border mergers and acquisitions? The eloquent answer is the traditional one: building shareholder value! Corporations frequently seek growth in search of new markets, resources, productive advantages, profit, investment opportunities and elements of competition through the acquisition of other companies. Corporations undertake mergers and acquisitions transaction for a variety of reasons. The drivers are strategic responses by firms to defend and enhance their global Competitiveness by: à ¢-  Gaining access to strategic proprietary assets à ¢-  Gaining market power and dominance à ¢-  Achieving synergies in local/global operations and across different industries à ¢-  becoming larger, and then reaping the benefits of size in competition and negotiation à ¢-  Diversifying and spreading their risks wider à ¢-  Exploiting financial opportunities they may possess and others desire We can summarize that the Motives behind mergers and acquisition activity by listing Some motives: To create a number of new business opportunities (Healy et al. 1990, 23) and entry new Markets (Black, Carnes and Jandik 2001,5) To reduce earnings volatility (Healy et al. 1990, 23; Black, Carnes and Jandik 2001,5) Technical Efficiency (Chaaban, Rà ©quillart and Trà ©visiol 2005) and economies of scale employment risk i.e., risk of losing job, professional Reputation, etc. Managersà ¢Ã¢â€š ¬Ã… ¸ personal wealth is linked more to firm size and risk ofBankruptcy than to firm performance (Amihud and Lev 1981). The merger offers anopportunity to improve oneà ¢Ã¢â€š ¬Ã… ¸s social identity as well (Terry, Callan and Sartori 1996) Value maximization (Halpern 1983, 314) is specially a shareholderà ¢Ã¢â€š ¬Ã… ¸s goal (Bethel and Liebeskind 1993, 29) Use of control position (Halpern 1983, 314) Synergy (Halpern 1983, 314; Chatterjee 1992) Monopoly (Halpern 1983, 314) Corporate restructuring is needed industry wide (Hatfield, Porter Liebeskind, Opler 1996; Markides 2006; Chatterjee 1992) cost reduction (Dranove and Shanley 1994) -managerial vs. shareholder interests (Taffler, Holl 2006; Holl and Kyriazis 1997; Mahoney and Mahoney 1991; Mahoney and Mahoney 2006; Firth 1991). Motives for takeovers tend to reflect managerial rather than shareholder interests in abandoned mergers (Taffler and Holl 1991). Amit, Livnat and Zarowin (1989) have investigated owner-manager conflict of interest. Reputation enhancement (Dranove and Shanley 1994): local systems do not appear to have lower cost but do appear to enjoy reputation benefits Innovation performance (Ahuja and Katila 2001) Resource redeployment (Capron, Dussauge and Mitchell 1998) Power, achievement, sensation seeking and prestige (Lausberg and Stahl 2006)

Lab

The main function demonstrated by Spunk where the ability to quickly analyze data and show correlations in the data. This builds more secure operations, because data can be compiled and analyzed in minutes instead of hours and days. Thus any necessary action by operations personnel and security personnel can take place in a reasonable amount of time. Spunk also can monitor server events and report alerts as needed to alert personnel to ongoing or current issues. 3.What types of â€Å"Data Inputs† are available in Spunk and most other log management tools? Spunk can receive data inputs from event log collection, remote event log collections, files and directories, local performance monitoring, remote performance monitoring TCP, UDP, Registry monitoring active directory monitoring, and scripts. 4. What types of â€Å"Alert Conditions† are available in Spunk and most other log management tools? A. A Basic Conditional Alert is a trigger that is set off when a certain number Of alerts that have been scheduled is surpassed. . An Advanced Conditional Alert is a trigger that is set off when a secondary alert is met in addition to the primary scheduled alert. 5. What types of â€Å"Alert Actions† are available in Spunk and most other log management tools? Basic alerting, Advanced alerts and confining options, Real-time alerting and throttling, and Alert Manager 6. What is the search string for the â€Å"windows-fletching- failure† pre-configured Search? 7. What is the search string for the performance_snapshot automated Job which comes pre-configured? . Provide at least five (5) examples of security or operations related Windows Management Reports and Searches that are pre-configured and available within Spunk 9. What Chart Types are available for a search or report within Spunk? There are column, line, area, bar, pie, scatter, radial gauge, filler gauge, and marker gauge. 10. What Scheduled Search did you configure to Alert and/or Report wit hin Spunk to help your AOL of Implementing Security Operations Management Best Practices?Explain the reasoning behind scheduling this particular alert. I would schedule the prefigured search, errors in the last hour, to run every hour. This would allow me to see any errors that are relatively new that I could look into quickly. Ideally alerts in real time would be better, but if just choosing one to run while another search is developed this would be good.

Let’s analyze the gaming console industry Essay

We can define two types of supplier: the hardware supplier and the software supplier. The hardware suppliers providing the elements needed to build the consoles have a low bargaining power because there have very low switching costs and there are a lot of them. On the other hand, the software suppliers (developers) have a high bargaining power because they choose and set the conditions to work with each console. Entry Barriers Entry barriers are high because of high R&D costs and the high capital investment needed to start a business in the console industry. Internal Rivalry There is high internal rivalry among competitors because the core player market is growing slowly, competitors have high exit barriers and the products developed turn obsoletes in less than 5 years due to the fast progress of technology. The players in the industry are: Sony, XBOX and Nintendo. Buyer Power The bargaining power of buyers is high because there are many options with very low switching costs. Substitutes Low substitute power because they are not very similar (like TV or other entertainment device) and don’t fulfill the same exact purpose. Sony has few competitors due to high barriers-to-entry and startup costs but buyers and suppliers (game developers) have high bargaining power and low switching costs. Sony should target a new market as Nintendo did. We could call this market the casual players market. In order to get in this new segment, Sony will have to develop a more interactive way of using their console without dropping the numerous features to avoid losing their core player market share. The key of success for Sony is to adapt a new technology such as Nintendo did with Wii that will enable the company to target a broader market and not only the males from 16-36 years old. The advantage of entering those two markets with one console is that Sony will enter a bigger market with bigger returns and consequently bigger economies of scales. Also, entering the casual player market is important for the company to avoid falling behind its competitors in both markets since this new segment will enhance the brand exposure and recognition. The risk associated to this option is to turn this high performing console in a low performing console (as Nintendo did) and lose the core players customers that are very important to Sony financial stability and growth. A big challenge for this new console will be to cut costs in order to make it more accessible to customers, since the casual players market will definitely be â€Å"guided† by price. Vis-a-vis the Five Forces, if Sony were to pursue this option, the company will be competing in the core player market and on the casual player market. On the casual player market the substitutes will have more power. Sony will compete with other activities such as watching TV, watching a movie and others living room activities. The main â€Å"purpose† of this market is entertainment in general while the core player market is about playing video games. Update: Sony and Microsoft had already implemented advanced interactive technologies. Nowadays, Microsoft has the most advanced software and hardware that don’t need controllers anymore, just your body.

Personal Statement On Health Care - 964 Words

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