Key Insights on Merger and Acquisition Strategies- A Reflective Analysis

Key Insights on Merger and Acquisition Strategies- A Reflective Analysis

Mergers, acquisitions, and takeovers differ in the strategies used by organizations. A merger strategy is where two companies integrate their business activities to generate synergies. Acquisition strategy refers to an organization controlling another organization’s interests to make the acquired company a subsidiary operation within its portfolio. Simultaneously, a takeover is a particular form of acquisition where the target company cannot solicit the acquiring organization’s bid.

Companies engage in acquisitions for numerous reasons. Acquisitions increases market power and helps to overcome entry obstacles. Organizations can engage in either horizontal, vertical, or related acquisitions.

Formulating new commodities and services requires a substantial investment of the company’s resources, such as time. Therefore firms result in an acquisition strategy to facilitate their access to new commodities. The strategy also helps firms to operate at lower risks.

On the downside, acquisition promotes dependency of firms, which could be risky. Being reliant on another firm for innovation leaves an organization susceptible to external or internal threats. More so, the acquiring organization may be less capable of mastering its vision when it entails utilizing the innovation factor based on wealth creation.

Acquisitions are most preferred to enable diversification. Organizations prefer to produce and introduce new commodities in markets. Thus, acquisition approaches are utilized to promote the application of associated and unrelated diversification strategies.

Mergers and acquisition strategies play a significant role in reshaping an organization’s competitive parameters. Companies may utilize acquisitions to reduce product or market dependency. This approach reduces the negative impacts of intense competition on financial performance.

Sometimes organizations engage in acquisitions to acquire access to capabilities lacking in their firms. This strategy helps firms broaden their skills and minimize inactivity through acquisition. Moreover, they gain increased potential of their capabilities when they secure diverse talent through cross-border acquisition.

Acquisition strategies may present problems to firms in the arena of attaining success. They can result in amalgamation challenges, preliminary assessment of target, immense debts, over-diversification, and too much focus on acquisitions.

Effective acquisition or merger focuses on creating value when the type of integration and process utilized is consistent with the qualities of a successful acquisition. Friendly merging enables integration of acquiring and acquired companies. Additionally, an effective due diligence process that involves deliberate and careful choice of target and health of those firms facilitates successful acquisition.

Restructuring is an approach where organizations alter their operations set or financial structures. Downsizing is a form of restructuring that entails reducing the labor force and operating units. Another restructuring strategy is down-scoping, involving divestitures or elimination of operations not associated with a firm’s core businesses. Lastly, leverage buyouts is a restructuring approach where a private equity firm purchases an organization’s assets to privatize the company.

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This week the readings/videos focused on Merger and Acquisition Strategies.

Key Insights on Merger and Acquisition Strategies- A Reflective Analysis

For this assignment, I would like you to reflect on the literature and identify 10 key points you took away from the assignments. For each key point, you are to determine the point and provide 2-3 sentences explaining the point. Please number each of the 10 points.