Chapter 13 - Mergers and Acquisitions Flashcards
Ghemawat and Ghadar basic idea
Global M&A transactions do not make economic sense
Several management biases that lead to inefficient M&As and recommend several alternative strategies
Why are there M&As?
Occur to create larger firms
Better able to deal with globalised markets
6 sources of biases for why managers like M&A
Top line obsession
Stock price exploitation
Grooved thinking
Herd behaviour
Personal commitment
Trust in interested parties
Top line obsession
Focus on the growth of sales, not profits
Stock price exploitation
In case of overvalued stock prices, a manager would like to benefit from that
Grooved thinking
This is the way we have always done it
Herd behaviour
Copy paste
Do what the competitor does
Trust in interested parties
Investment bankers can influence companies to engage in M&As
