M&A Flashcards
1
Q
What are the reasons for acquisitions?
A
- Increase market power
- Overcoming entry barriers
- Cost of new product development and increase speed to market
- Lower risk compared to internal development
- Increase diversification
- Reshape the firm’s competitive scope
- Learn and develop new capabilities
2
Q
What are the problems in achieving success in acquisitions?
A
- Integration issues
- Inadequate evaluation of target
- Large or extraordinary debt
- Inability to achieve synergy
- Too much diversification
- Managers overly focused on acquisition
- Too large
3
Q
What are the types of acquisition integration approaches?
A
Organizational autonomy/Strategic interdependence
- high/high: symbiosis
- high/low: preservation
- low/high: absorption
4
Q
What are the two post merger approaches and its key differences?
A
Integration vs. Parnering:
Absorb acquired firm vs. keep it separate
