Know-How Exchange : Student Questions

Mergers and acquisitions are enormously
complex undertakings that can be as
risky as they are rewarding.When two organizations with different internal
controls, management styles, and processes attempt
to integrate, business risk increases exponentially.
First there are the potential distractions of
consummating the M&A transaction – taking
executives’ attention away from the ongoing
demands of day-to-day business operations. Once
concluded, failure to deal effectively with the volumes
of data, the complexity of integrating systems, and
the process of turning post-merger data into useful
information can have disastrous consequences for
the companies and executives involved.
Organizations that are unable to negotiate these
change management hurdles often fail to achieve
the anticipated benefits of combining their operations.
The much-touted synergies of consolidating entities
to produce greater efficiencies and cost savings are
unrealized or minimal at best. Competitors are quick
to capitalize on missteps that inevitably follow a
merger or acquisition when inaccessible, inadequate
or unreliable data causes managers to make unsound
business decisions. Capital markets swiftly punish
poorly executed mergers and acquisitions with steep
declines in share prices and the unfortunate
executives who mismanage mergers or acquisitions
often see their careers derailed.

More mergers, more risk

Despite these risks, mergers and acquisitions are
continuing in response to the globalization of the
economy and heightened competitive pressures. Many
companies turn to mergers and acquisitions for faster
growth and aggressive expansion as an alternative
or complement to internal organic growth.
Two points in the merger and acquisition process
are critical to reducing the risks inherent in the
undertaking. The first is pre-merger or acquisition
when companies conduct due diligence on financial
and operational data and information to forestall
surprises that may pose threats to the new entity.
The second is post-merger, when organizations must
deal with a sharp, sudden increase in customers and
related data as well as the adoption of disparate
information systems.These challenges can devour time as executives and
managers struggle to review data to make purchase
decisions or to integrate multiple and varied business
and operational processes.


Go through this , if you wanna have some more info or details pls revert.

Thanks,
Ritesh Bijlani.

Since this is a marketing thesis, I would revise your topic a little - "Mergers & Acquisitions - the Impact on Marketing". I think SABMiller is an excellent case study for this kind of topic.

Although the first responder gave you a lot of good ideas about the issues generally with M&A, I would think as a marketing paper you could focus on the following subtopics, giving each about 3000 words (plus an intro and summary) to get you to 15k.

1) What are the marketing reasons that companies do mergers in the first place? Why did SAB do it - was it to increase market share, expand into new geographies, create a bigger product portfolio, etc?

2) How do mergers impact the parent brand? Are they directly aligned, or do they create new challenges in making the public understand how the products are related? For example, if Miller is known for its existing brands as middle market, what happens when it acquires high-end/premium products?

3) What do mergers do to marketing efficiency and effectiveness? Can the combined entities save any money by marketing a group of products, versus one at a time? Can they be more effective in their marketing campaigns by leveraging each product's strengths to help sell the others?

4) What is the impact on the customers - both the value chain (in Miller's case, the distribution network) and the end consumer? Are they more or less likely to buy the products now that the companies are combined?

Since SABMiller has been so active in M&A over the years, you should be able to find a lot of information related to these 4 subtopics.

Good luck.

Hi

Sorry to be a party pooper, but Ritesh appears to have copied his contribution verbatim from an ACL Paper published in 2002 from an article written by Price Waterhouse.

It’s OK to quote, but it is disingenuous not to attribute the source, especially if you include a huge chunk of it without any further analysis. If he was the original author (Which I can’t see any evidence for), then that’s a bit better, but the original article should still be cited. Here’s the link to the abstract in it totality if you want to read it.

https://www.acl.com/pdfs/Executive_Brief_Mergers_Acquisitions.pdf


Now: Is it a good subject for an MBA thesis? Well in my opinion it will give you enough meat to subject it to a rigorous analysis covering the original topic question. Kevin’s ideas are excellent starting points, but I’d go further in examining the benefits conferred to other groups, who profit enormously from M&A and they rarely include customers, employees or shareholders of either company.

They usually include the advising merchant banks, the directors of the target company and the directors of the purchasing entity. (Another quoted company, a cash shell or a venture capital firm these days) Deals rarely enhance shareholder value and have little regard for the customers or the employees.

In fact it is very easy to become very cynical about the whole M&A scenario as companies go on buying sprees and then go on selling sprees, generating vast sums for everyone organising or partaking in this activity without contributing an iota to the wealth of the shareholders. Did SAB Millar generate increased shareholder value? Will it do so in the future?

Also, I don’t think that you can answer your question by concentrating on one company alone. To determine whether mergers are “Necessary” you will need to look at a number of mergers and make your deductions from them whilst using SAB Millar as a detailed case in point.

Personally, I’m all in favour of them. They generate vast remuneration for my Merchant Banking Pals and opportunities for very lucrative consultancy work in integrating and re-working their CRM systems for me, but that’s a rather selfish standpoint isn’t it? It’s almost as selfish as the attitudes of the blokes with the red braces who persuade the board of the aggressor company to make their bid in the first place.

Mine’s another Ferrari, please – the old one needs washing and we’ve just got a hosepipe ban here in the UK.

Best wishes


Steve Alker
Unimax Solutions