Mergers & Acquisitions
Dr. Philip Sturm
August 16, 2015
Mergers & Acquisitions
The following paper will cover information regarding mergers and acquisitions. I will cover the reasons why some mergers fail and others succeed. Examples of companies will be provided that have succeeded and failed with mergers and acquisitions. Mergers and acquisitions will be abbreviated with M & A’s in this paper.
Mergers and acquisitions are very expensive and usually viewed to be negative. Most people do not feel there are positive outcomes from them. Many American people fear the layoffs that come with M & A’s, ...view middle of the document...
Other reasons for failure are incorrect organizational structures, wrong team players or poor management, not communicating to the employees or community, and focusing on profit instead of customers and sales. Sometimes companies go bankrupt and they can even go through a corporate divorce to become separate entities.
One example of a failed merger was Daimler Benz and Chrysler in 1998. The merger cost $37 billion and failed due to corporate culture clash. Benz is a high-end dealer and Chrysler was completely the opposite. Another failed merger was Mattel and the Learning Company in 1999, which cost $3.5 billion. The Learning Company was almost bankrupt at the time of the merger. The goal was to get into education software. Less than a year after the merger, The Learning Company lost $206 million and was causing Mattel to lose $1.5 million a day. The Learning Company was sold by the end of 2000.
There are some M & A’s that do turn out to be successful. The main reason they succeed is due to proper planning and implementation of the process and understanding of the industry. Other reasons are due to good cultural fit, great internal and external communication, and having core values that everyone understands.
One example of a merger that succeeded was Sirius and XM radio. This merger took place in 2008 but was announced in 2007. The FCC granted the license with the stipulation that the two would not acquire control of each other. As of today, the two are still a match made in heaven and I am a current customer of the SiriusXM subscription in my car. Another merger that was...