logging in or signing up strategy acquisition Octavio Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINT Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 2470 Category: Entertainment License: All Rights Reserved Like it (0) Dislike it (0) Added: September 12, 2007 This Presentation is Public Favorites: 0 Presentation Description No description available. Comments Posting comment... By: thangarajv (12 month(s) ago) good presentation..can you give me access to download Thanks Saving..... Post Reply Close Saving..... Edit Comment Close By: at4132 (13 month(s) ago) this is nice presentation for basics Saving..... Post Reply Close Saving..... Edit Comment Close Premium member Presentation Transcript Slide1: Mergers and Acquisitions Merger A transaction where two firms agree to integrate their operations on a relatively coequal basis because they have resources and capabilities that together may create a stronger competitive advantage Acquisition A transaction where one firm buys another firm with the intent of more effectively using a core competence by making the acquired firm a subsidiary within its portfolio of businesses Takeover An acquisition where the target firm did not solicit the bid of the acquiring firm The value of M&A strategies: The value of Mandamp;A strategies NPV(A) = net present value of firm A as a stand-alone entity NPV(B) = net present value of firm B as a stand-alone entity NPV(A+B) = net present value of firms A and B as a combined entity P = NPV(A+B) – NPV(A) any price for a target (i.e., B) less than P will be a source of an above-normal economic profits for the bidding firm (A). Potential sources of strategic relatedness between bidding and target firms: Potential sources of strategic relatedness between bidding and target firms Synergies: NPV(A+B)andgt;NPV(A)+NPV(B) Technical economies: physical processes inside a firm are altered so that the same amounts of input produce higher quantity of outputs. Pecuniary economies: the ability of firms to dictate prices by exerting market power Diversification economies: lowering risks relative to its performance. Possible motivations to engage in M&As: Possible motivations to engage in Mandamp;As Overcome Barriers to Entry (over capacity) Lower Cost and Risk of New Product Development Speedy entry Reduce dependence on a few input or product markets Increase market power Diversification Free cash flow Agency problems Managerial hubris (unrealistic relief held by managers in bidding firms that they can manage the target firms more efficiently than can the target’s current management). Rules of bidding firm managers: Rules of bidding firm managers Search for synergies Keep information away from other bidders Keep information away from targets Avoid winning bidding wars Slide6: Problems with Acquisitions Example: Marks and Spencer’s acquisition of Brooks Brothers Example: AgriBioTech’s acquisition of dozens of small seed firms Slide7: Example: Quaker Oats and Snapple Example: GE--prior to selling businesses and refocusing Problems with Acquisitions Slide8: Attributes of Effective Acquisitions Slide9: Attributes of Effective Acquisitions Slide10: Example: Procter andamp; Gamble’s cutting of its worldwide workforce by 15,000 jobs Restructuring Activities Example: Disney’s selling of Fairchild Publications Slide11: Leveraged Buyout (LBO) A party buys a firm’s entire assets in order to take the firm private. Example: Forsmann Little’s buyout of Dr. Pepper Restructuring Activities Slide12: High Debt Costs Emphasis on Strategic Controls Downscoping Leveraged Buyout Reduced Debt Costs Higher Performance Higher Risk Downsizing Reduced Labor Costs Loss of Human Capital Lower Performance Alternatives Short-Term Outcomes Long-Term Outcomes Restructuring and Outcomes You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.
strategy acquisition Octavio Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINT Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 2470 Category: Entertainment License: All Rights Reserved Like it (0) Dislike it (0) Added: September 12, 2007 This Presentation is Public Favorites: 0 Presentation Description No description available. Comments Posting comment... By: thangarajv (12 month(s) ago) good presentation..can you give me access to download Thanks Saving..... Post Reply Close Saving..... Edit Comment Close By: at4132 (13 month(s) ago) this is nice presentation for basics Saving..... Post Reply Close Saving..... Edit Comment Close Premium member Presentation Transcript Slide1: Mergers and Acquisitions Merger A transaction where two firms agree to integrate their operations on a relatively coequal basis because they have resources and capabilities that together may create a stronger competitive advantage Acquisition A transaction where one firm buys another firm with the intent of more effectively using a core competence by making the acquired firm a subsidiary within its portfolio of businesses Takeover An acquisition where the target firm did not solicit the bid of the acquiring firm The value of M&A strategies: The value of Mandamp;A strategies NPV(A) = net present value of firm A as a stand-alone entity NPV(B) = net present value of firm B as a stand-alone entity NPV(A+B) = net present value of firms A and B as a combined entity P = NPV(A+B) – NPV(A) any price for a target (i.e., B) less than P will be a source of an above-normal economic profits for the bidding firm (A). Potential sources of strategic relatedness between bidding and target firms: Potential sources of strategic relatedness between bidding and target firms Synergies: NPV(A+B)andgt;NPV(A)+NPV(B) Technical economies: physical processes inside a firm are altered so that the same amounts of input produce higher quantity of outputs. Pecuniary economies: the ability of firms to dictate prices by exerting market power Diversification economies: lowering risks relative to its performance. Possible motivations to engage in M&As: Possible motivations to engage in Mandamp;As Overcome Barriers to Entry (over capacity) Lower Cost and Risk of New Product Development Speedy entry Reduce dependence on a few input or product markets Increase market power Diversification Free cash flow Agency problems Managerial hubris (unrealistic relief held by managers in bidding firms that they can manage the target firms more efficiently than can the target’s current management). Rules of bidding firm managers: Rules of bidding firm managers Search for synergies Keep information away from other bidders Keep information away from targets Avoid winning bidding wars Slide6: Problems with Acquisitions Example: Marks and Spencer’s acquisition of Brooks Brothers Example: AgriBioTech’s acquisition of dozens of small seed firms Slide7: Example: Quaker Oats and Snapple Example: GE--prior to selling businesses and refocusing Problems with Acquisitions Slide8: Attributes of Effective Acquisitions Slide9: Attributes of Effective Acquisitions Slide10: Example: Procter andamp; Gamble’s cutting of its worldwide workforce by 15,000 jobs Restructuring Activities Example: Disney’s selling of Fairchild Publications Slide11: Leveraged Buyout (LBO) A party buys a firm’s entire assets in order to take the firm private. Example: Forsmann Little’s buyout of Dr. Pepper Restructuring Activities Slide12: High Debt Costs Emphasis on Strategic Controls Downscoping Leveraged Buyout Reduced Debt Costs Higher Performance Higher Risk Downsizing Reduced Labor Costs Loss of Human Capital Lower Performance Alternatives Short-Term Outcomes Long-Term Outcomes Restructuring and Outcomes