外文翻译并购失败的原因.docx
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外文翻译并购失败的原因.docx
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外文翻译并购失败的原因
本科毕业论文(设计)
外文翻译
原文:
Reasonsforfailureinmergersandacquisitions
Mergersandacquisitionshavebeenusedasatoolforfacilitatingcorporateexternalexpansionsthroughthecontrolofsharesandassetsinanothercompany,orbyconsolidatingresourcesandoperationstogainfullandeffectivecontrolofthemarket,undertakejointstrategicopportunitiesandhedgingagainstbusinessrisk.Theacquiringcompanyperformsacapitalbudgetinganalysistoensurethatitwillearntherequiredrateofreturn,andbeyondthat,specialconsiderationsforlegal,tax,accountingandfinancialissuesarebroughtintoperspectivewhendeterminingvaluethatwillbeadded.
MergersandacquisitionsareanintegralpartofSouthAfricancorporatelife,anditisthereforerelevantforustoanalyzethereasonsforfailureinM&A's,andhowtosetthetermsforasuccessfulmergeroracquisition.Asthesametime,aspartofduediligence,howthesetermsgetwronglyappliedormisjudgedintheeventofabusinessdealcomingtofailure.
Insummary,mergersandacquisitionsareprimarilyaimedatfacilitatingcorporateexpansions,allowformarketdominanceandbusinessriskdiversification.Mergersandacquisitionsaremotivatedbythedesiretoacquiremoreopportunitiesthattheacquiringcompanydoesnotpossessinfullorinpartthroughdirectorindirectparticipationintheacquiredbusiness.Failureattributabletoanyoftheopportunitiesdrivingthebusinessacquisitiondecisioncanresultinaninvestmentbecomingnon-viableandfailingtorealizeexpectedsynergiesformaximizingpost-acquisitionreturns.
Reasonsformergersandacquisitionsarethefollowing:
Operatingeconomies,managerialskills,andtaxconsiderations-assessedlosses,useofexcessliquidity,diversification,lowerfinancingcosts,replacementcostsandtechnologyintegration.Someofthesefactorsareexplainedinthisresearchcontextwheredeemedrelevanttothecontentofthisresearch.
Theneedtocontributesomeanalyticalthinkingandcriticaljudgmenttowardsthestudyonmaximizationofcorporatereturnsthroughdiversificationofinvestmentrisk,toenablethespreadofriskbetweendiversifiedbusinessinterestshasbeenthekeymotivatorforthisstudyonMergersandacquisitions.
Theproblemassociatedwithfailuretoachievetheabove-mentionedmotivationismainlyattributedtocompanieslookingforwardtoinvestingsurpluscapitalwithoutadequatelyevaluatingthepotentialfinancialandtechnicalviabilityoffuturebusinessactivitiesthatlieaheadoftheirtargetcompanies.
Mostorganizationsinvestwithouthavingundergonesufficientduediligenceinordertogainfullknow-howofthebusinesstheywishtoembarkon.Aninsufficientcoverageisdangerous,asacquirersdowipemorevalueofthemarketcapitalizationthroughfailuresinduediligence.
Lackofproperfeedingofduediligenceintothebusinessplans,hasseenthecollapseofmostbusinessesaftertheM&Aprocess.Fornoviceacquirers,aduediligenceisjustaninformationgatheringprocess,theyusuallydonotbegintoformulatestrategyandbuildavaluationmodeluntiltheprocessiscomplete,andhencefailtolinktheirduediligencecloselytobusinessplanning.
Thepurposeofthisstudyistoestablishreasonslinkedtopost-acquisitionfailureinM&Adeals,toestablishhowthesefailuresdevelop,andtofindbestpossiblemeansandoutcomeofplanningandstructuringanoptimumdue-diligenceapproach,priortonegotiatingadealwithotherpartiestothetransaction.
Thelimitingfactorsonthisstudyareduetothefactthattheresearchexercisewasbasedonanentitythatnolongerexists,andforwhichpartoftheinformationnecessaryforexecutingthisprojectisstillperceivedconfidentialandnotbeingmadeavailableforpublicconsumption.
Therelevanceofthisstudyispertinentintheinvestmentbankingsector,andtocorporateinvestmentmanagerslookingforwardtomakingkeystrategiccorporateinvestmentdecisions.
Reasonsleadingtosynergiesinamergerandacquisitiondealcanbeoverstatedwiththeintenttocomeupwithanattractivevalueforthedeal,ortorenderagoodimpressiontofacilitatethedealtogoaheadwithoutanadequatefeasibilitystudyontheachievementofcitedreasonsformergeroracquisition.Theoverstatingornon-considerationofallreasonsthatshouldbeconsideredforevaluationaspartofduediligencehasledtofailureofmergedandacquiredenterprises.
Insomecases,mergersandacquisitionsareembarkeduponforsolepurposesoftaxconsiderations.Wheretheacquiringcompanycansetoutgoodeconomicreasonsforthemerger,theset-offoffutureincomeofthetargetcompanyagainsttheassessedlossofthemergerpartnerwillbeallowed.
ThegearingeffectofthepostM&Adealcanleadtothefailureofcompaniesduetotheinherenthighfinancialriskandpoormanagementofliquidity.Forexample,themergedcompanymayresultinimprovedcreditratingthanbefore,whencompanieswereoperatingasseparateentities.Themergedcompanymaydecidetomakefulluseofitsimprovedcreditratingoncapitalprojectswithfeasibilityofearningpositivereturns.
Mergersandacquisitionsaresometimesdecidedonfirmswantingtotakeanopportunityonfulluseoftechnologicalresourcesandskillsofanotherortargetentity.Technologychangesrapidly,andnewadvancedtechnologyoutperformstheoldversion.
Differenttechnologiescandifferentiatequalityofproductsandservicesandimmediatelydivertconsumerfocusandperceptionontheproduct.FirmsdecidetomergeongroundsofusingthetechnologicalexpertiseandresourcesofTargetCompany.Intheeventoftechnologyadvancingintheshort-term,theexpectedbenefitsoutofthistechnologybasecollapseandtheinvestmentforthemergerbecomesworthlessasmorecostlycapitalwillberequiredforre-investmenttomakethenewbusinessremaincompetitive.
TherearedazzlingvarietiesofreasonsleadingtoM&A.Theirprojectedevaluatedoutcomesthroughtheduediligenceexercisehaveadirectimpactinthevaluationexerciseofthetwocompaniesintheeventofamerger,orthetargetcompanyintheeventofanacquisition.Incaseoffailuretoaccuratelypredicttheoutcomeofthesereasons,orthepostimplementationstrategynotbeingeffectiveandefficienttoensureaccomplishmentofexpectedresults,failureofthemergeroracquisitionisprobableundersuchcircumstances.
AnotherreasonthatM&Afailisduetoinsufficientattentionpaidinordertomakethedealworkafterthetransactionhasbeenconcluded.Often,thedealisnegotiatedatseniorexecutivelevel,wherethefocusismostlystrategic,andthentheimplementationislefttotheimmediatelowerlevelofmanagement.Whatoftentranspiresisthat,thislowerlevelofmanagementmaynotsharethesamevisionwiththatofseniorexecutivelevelwhichdrewthepostintegrationbusinessplan,andasaresulttheymayendupnotbeingintunethecriticalstepsthatneedtobetakentounlocktheanticipatedvalue.
ThekeymotivebehindM&Aisexpansionoftheexistingmarketbaseandcreationofwealththroughacquisitionofsmallerroleplayerswhocanaddtothisbenefit.However,lackofproperpostacquisitionstrategiescouldseetheacquisitionpurposenotbeingrealized.
Lackofpostacquisitionstrategyonaddressingtheembeddedvaluefactorswhichcanbeoverlookedatacquisitionpoint,canleadtopoorgovernancebeingexperiencedmovingwayforward.ThelackoffocusinplanningforsystemsintegrationlikefinancialandoperatingsoftwareorERPsystemsresultedincontrolweaknesseswhichledtomanypostM&Afailures.
Althoughthemarketsharesforthepartieswillbeabove15%,theyarenotlikelytoraisecompetitionconcerns,asthereareotherbigfinancialinstitutions,whicharecompetingwiththemergingfirms.Thesebigfinancialinstitutionsarelikelytodisciplinepriceshouldthemergedentityattempttoincreasetheirpricesabovecompetitivelevel.Inaddition,thistransactiondoesnotraisesignificantpublicinterestconcerns.
Themaindriversformergersweremanagementbuy-outsasaresultoflargecompaniesdivestingtheirnon-corebusiness,failingfirms,blackeconomicempowermentinitiatives,inparticularintheminingandpetroleumindustries,andfinancialservicesrestructuring.Forexample,thereasonforfailureofRandacquisitionwasthatreferredtoarbitrationbythedealwasdeclarednottobeinthepublicinterest,duetothedealnotbringinganydiversitytofinancialinstitutionsserviceofferings,withnopositiveimpactontariffsasotherbigbankswefoundtobeinapositiontointerveneonpricesifthedealcouldresultinpricechanges,aswellasprojectedpost-acquisitionmarketsharenotexpectedtochangebetweenthetwobanks.Thatis,theypositivelyaffectedblackeconomicempowermentandsmallandmediumenterprises.Thegreatestimpactwasinmining,followedbymanufacturingandretail,whereasothersectorscontributedlessthan10%eachinthisregard.The27%blackeconomicempowermentcomponentofmergeractivityattributabletominingcomparesfavorablywhenviewedagainstoverallmergeractivity,whereminingcomprised9%ofallmergersnotifiedwiththeCommission.Wholesaleactivitiescontributed9%intermsofblackeconomicempowermentandsmallandmediumenterprisedevelopment,andonly5%oftotalmergeractivity.Thefiguresforothersectors,however,leavemuchroomforimprovementintermsofblackeconomicempowermentandsmallandmediumenterpriseparticipation.
Therehasbeenanincreaseinmergeractivityinthefinancialservicessector-from12%to13.8%.Thisincreaseisindicativeoftherestructuringofthefinancialservicessectordur
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