The Complexities of Synergy Effects in Mergers and Acquisitions (M&A´s) 1996 (English)Independent thesis Advanced level (degree of Master (One Year))Student thesis

Abstract [en]

In 1993, a wave of mergers and acquisitions (M&A´s) started that has broken all earlier records in magnitude. This is despite the fact that statistics stress increasingly dull performance results. However, the impact of external factors, such as increasing global competition, leaves many multinational copmanies with no ther choice than to engage in merger and acquisition activity (MAA). Companies are also desperately seekong synergy effects that essentially could lead to the much wanted competetive edge against competitors. Researchers point out, though, that copanies often engage in MAA in search of synergy effects that do not exist. In addition, the actual synergy effects are more or less not being realised because companies fail to omplement and cope with post-merger integration. However, the gap between theory and practice is obvious. While researchers question the sanity of managers, the managers themselves stress the impracticality of existing research and the actual usefulness of the researcher´s results. With this background in mind, this dissertation focus was to find out what factors in the M&A process that affect the expectation and reasisation of synergy effects. While earlier reaearch has focused on factors in parts of the M&A process, including pre-merger valuation, post-merger integration and post-merger performance measuring, this desertation gives a more complete and thus in reality more practical picture of booth the pre-merger and post-merger phases. This dissertation´s empirical research was conducted in co-operation with the newly merged pharmaceutical company Pharmacia & Upjohn, Inc. The information was collected on-site in Dublin, Ohio, USA in the form of interviews and documents. The aim with the in.depth case study was not to generalise any solutions. Instead, it was a successful tool to highlight the problem formulation and the objectives, as well as a good complement to theory. The major contribution of this dissertation was the suggestion of a pracitcal checklist. By covering the entire M&A process, it highlights the most important issues stressed throughtout the text concerning synergy effects. In line with the purpose of this dossertation, it is here considered to have four advantages in a practical sense compared to most researchers´ framework within the subject of M&A: 1) It combines theory and practice, which makes it more useful in reality. For instance, the checklist does not only stress what could be potential problems but also gives a couple of suggestions on how to deal with them. 2) It incorporates issues that can be related to dispersed areas of research, such as finance, organisational and even psychological theory. Ot is highlighted that in order to get a more complete picture of the important issues in the M&A process, the different areas of research can not be studied separately. 3) It incororates issues that can be related to different parts and phases of the M&A process, i.e pre-merger as well as post-merger issues. While e.g. most post-merger research starts off from a notion of actual synergy potential, it has in this dissertation been shown that some important issues affecting the synergy effects appear already in the pre-meger phase. 4) It is depicted in a longitudinal sense, which makes it easier to grasp in practice. It ha finally been stressed that future research must concentrate more on informing managers on what could go wrong and how to handle it. Currently, many researchers are trying to come up with 100% valid solutions, something which is very difficult if not impossible concidering the changing enviroment in most industries.

Place, publisher, year, edition, pages

1996.

Keywords [en]

Pharmacia, Synergi Effects, Mergers, Acquisitions

Identifiers

URN: urn:nbn:se:hh:diva-6952Local ID: U0776OAI: oai:DiVA.org:hh-6952DiVA, id: diva2:361991

Uppsok

Social and Behavioural Science, Law

Note

Denna uppsats kan beställas från arkivet / This paper can be ordered from the archive. Kontakta / Contact: arkivet@hh.seAvailable from: 2010-11-09 Created: 2010-11-09Bibliographically approved

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