3.1 - Mergers Flashcards
What is a joint venture?
Businesses join together to pursue common project
Remain separate in legal terms
Firms want to benefit from collaborative work
Which factors often cause mergers to fail?
Funding takeovers
Integrating systems
Corporate culture clash
Loss of human capital
Over-payment (Winner’s Curse)
Timing issues
How can funding cause a merger to fail?
Large/unsustainable expenses
Prominent in cases with reliance on loan finance
How can the integration of systems cause a merger to fail?
Technology incompatible
Systems may be impossible to use in conjunction
Why may a merger result in a loss of human capital?
Acquisition may result in the loss of jobs
Consumer base may narrow
What is the Winner’s Curse?
Company pays over the odds to take control of a business
How can timing cause a merger to fail?
Mergers which take place at the end of a sustained boom often prove harmful for both firms
