This document discusses mergers and acquisitions. It defines a merger as a transaction where two firms integrate operations on an equal basis to create a stronger competitive advantage. An acquisition is defined as one company buying another, where the acquiring company absorbs the target. Mergers and acquisitions are pursued to achieve economies of scale, consolidate saturated markets, and improve competitive position. However, they can fail due to cultural differences, flawed intentions, lack of guiding principles or ground rules, poor due diligence, and insufficient stakeholder engagement. The document provides examples and discusses the differences between mergers and acquisitions.

1. Mergers and
Acquisitions

2. BIG IT JOBS
(DIV: BIG IDEAS HR CONSULTING PVT. LTD.)
Presented by:

3. What is MERGER?
• A transaction where two firms agree to integrate
their operations on a relatively co-equal basis
because they have resources and capabilities that
together may create a stronger competitive
advantage.
• Example:
Company A+ Company B= Company C.

4. MERGER
Case study- NTT DoCoMo
and Tata

5. • It also known as a takeover or a buyout
• It is the buying of one company by another.
• In acquisition two companies are combine together to form a
new company altogether.
• Example:
Company A+ Company B= Company A.
What is ACQUISITION?

6. ACQUISITION
Case study- Tata Steel and Corus

7. THE FIRST CLASSIFICATION
ACQUISITION
PUBLIC (IF ACQUIREE
LISTED IN PUBLIC
MARKETS)
PRIVATE (IF ACQUIREE
NOT LISTED IN PUBLIC
MARKETS

8. THE SECOND CLASSIFICATION
ACQUISITION
FRIENDLY HOSTILE

9. Why Mergers And Acquisition are
done??
• Mergers and Acquisitions are pursued for a variety
of reasons:
1.Economies of scale in operations
2.Consolidation in saturated markets
3.Improving competitive position through larger asset base

10. ACQUISITION
i. Buying one organization by
another.
ii. It can be friendly takeover or
hostile takeover.
iii. Acquisition is less expensive
than merger.
iv. Buyers cannot raise their
enough capital.
v. It is faster and easier
transaction.
DIFFERENCE BETWEEN MERGER AND
ACQUISITION
MERGER
i. Merging of two organization in
to one.
ii. It is the mutual decision.
iii. Merger is expensive than
acquisition(higher legal cost).
iv. Through merger shareholders can
increase their net worth.
v. It is time consuming and the
company has to maintain so
much legal issues.

11. • Cultural Difference
• Flawed Intention
• No guiding principles
• No ground rules
• No detailed investigating
• Poor stake holder outreach
Why Mergers and Acquisitions Fail?

12. PROBLEM WITH MERGER
i. Clash of corporate
cultures
ii. Increased business
complexity
iii. Employees may be
resistant to change
MERGER:WHY & WHY NOT
WHY IS IT IMPORTANT
i. Increase Market Share.
ii. Economies of scale
iii. Profit for Research and
development.
iv. Benefits on account of tax
shields like carried forward
losses or unclaimed
depreciation.
12

13. PROBLEM WITH ACUIQISITION
i. Inadequate valuation of
target.
ii. Inability to achieve
synergy.
iii. Finance by taking huge
debt.
WHY IS IMPORTANT
i. Increased market share.
ii. Increased speed to market
iii. Lower risk comparing to
develop new products.
iv. Increased diversification
v. Avoid excessive
competition
ACQUISITION:WHY & WHY NOT

14. Impact of Mergers and Acquisitions
Impact
Employees
Competition
ManagementPublic
Shareholders

16. MOTIVES OF MERGERS AND ACQUISITIONS
Economy of scale:
This refers to the fact that the combined company can often reduce its fixed costs
by removing duplicate departments or operations, lowering the costs of the
company relative to the same revenue stream, thus increasing profit margins.
Economy of scope:
This refers to the efficiencies primarily associated with demand-side changes,
such as increasing or decreasing the scope of marketing and distribution, of
different types of products.
Synergy:
For example, managerial economies such as the increased opportunity of
managerial specialization. Another example are purchasing economies due to
increased order size and associated bulk-buying discounts.

17. • Continuous communication – employees, stakeholders,
customers, suppliers and government leaders.
• Transparency in managers operations
• Capacity to meet new culture higher management
professionals must be ready to greet a new or modified
culture.
• Talent management by the management
How to Prevent the Failure

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