Download or read book Horizontal Mergers with Synergies written by Wei Ding and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We consider takeover bidding in a Cournot oligopoly when firms have private information concerning the synergy effect of merging with a takeover target and bidders can influence rivals' beliefs through their bids. We compare cash and profit-share auctions, first- and second-price, supplemented by entry fees. Since non-merged firms benefit from a merger if synergies are low, bidders are subject to a positive externality with positive probability; nevertheless, pooling does not occur. Unlike cash auctions, profit-share auctions are not revenue equivalent, and the second-price profit-share auction is more profitable than the other auctions.
Download or read book Synergy in Mergers Acquisitions written by Stefan Karenfort and published by BoD – Books on Demand. This book was released on 2011 with total page 150 pages. Available in PDF, EPUB and Kindle. Book excerpt: The creation of synergy, which is often illustrated as the "2+2=5-effect", is a dominant motive as well as a key success factor for Mergers & Acquisitions (M&A). Inadequate expectations with respect to the synergistic potential can however easily result in an overrated acquisition price. If the planned synergies later fail to materialize, it will be increasingly hard for the acquiring firm to achieve positive value gains for its shareholders. It is therefore vital to obtain a comprehensive understanding of the synergistic potential of a planned M&A project. This issue was addressed with a doctoral thesis investigating the underlying drivers of synergy realization, in particular the concept of business relatedness which describes the similarity of firm attributes, such as product-market presence, resource configuration and supply channel types. Using a quantitative hypothesis-testing survey design, more than 300 M&A consultants worldwide have been invited to evaluate past M&A transactions with respect to their synergistic effects. In contrast to earlier studies, the relatedness of the merging firms is established as a multi-dimensional concept considering various attributes of business relatedness simultaneously. The degree of relatedness is measured using managerial perceptions which is a comparatively new measurement approach transferred from diversification research to the field of M&A. The individual dimensions of relatedness show a different effectiveness concerning synergy realization providing further support to recent contributions which advocate a multi-dimensional conceptualization of business relatedness. The study identifies dimensions of business relatedness and their underlying drivers which are particularly relevant to predictions concerning the synergistic potential. The research project thus makes a valuable contribution to clarify the impact of relatedness on M&A performance and provides important implications for practitioners regarding the eval
Download or read book Scale Economies and Synergies in Horizontal Merger Analysis written by Joseph Farrell and published by . This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Three years ago, the Antitrust Division and the Federal Trade Commission revised their Horizontal Merger Guidelines to articulate in greater detail how they would treat claims of efficiencies associated with horizontal mergers: claims that are frequently made, as for instance in the recently proposed merger between Heinz and Beech-Nut in the market for baby food. While these revisions to the Guidelines have a solid economic basis, they leave open many questions, both in theory and in practice. In this essay, we evaluate some aspects of the treatment of efficiencies, based on three years of enforcement experience under the revised Guidelines, including several litigated mergers, and based on economic principles drawn from oligopoly theory regarding cost savings, competition, and consumer welfare.
Download or read book Mergers and uncertain Synergies in Oligopoly written by Kathrin Tiecke and published by GRIN Verlag. This book was released on 2011-05-31 with total page 89 pages. Available in PDF, EPUB and Kindle. Book excerpt: Diploma Thesis from the year 2011 in the subject Economics - Micro-economics, grade: 2,0, Humboldt-University of Berlin (Wirtschaftstheorie II), course: VWL - Mikroökonomie, Industrial Organization, language: English, abstract: ...Farell and Shapiro state that there is no necessity for mergers as cooperation and coordination can be achieved at an equivalent level via contracts: “..., modern economic theory observes that virtually anything that can be done with a merger can in principle be done instead with some kind of contract, perhaps a very complex (or restrictive) one.” (Farrell and Shapiro 2001, p. 691)... 6.2 Concluding Remarks ...In the last section I introduce the strand of economic literature that deals with the process of mergers under uncertain efficiency gains. By introducing uncertain synergies to Cournot merger models the merger paradox can be solved in all above presented approaches and compared to the deterministic models there is a wider scope of profitable mergers. The informational asymmetry after the merger benefits the merger members although efficiency gains may be not obtained post merger. Thus mergers are more likely to be beneficial compared to the case where uncertain efficiency gains are not assumed. It has been shown that the incentives to merger coincide with the degree of uncertainty and when firms are aware of this uncertainty they are able to prepare for the post-merger integration process much better since post-merger actions can be specified more accurately. Any merger with uncertain synergies that needs to be approved by competition agencies can positively affect the approval by evaluating the uncertain efficiency gains with the required post-merger process... ...this may be an attempt to replicate the merger failures in the real world. To analyze further the role of uncertain synergies, models that depart from the one-shut nature should be implemented. This might give insights why merger formations appear wavelike and if the equilibrium changes when non-merged firms adjust as soon as they observe the true type of their (new) rival. As the world has become realistically more transparent the unmerged firms may observe rather fast whether they face a more or less efficient rival and so the time horizon should ex ante alter the expected profits of the market players compared to the one-shot nature of the standard Cournot game. The question what types of firms, the most or the least efficient ones are involved in a merger remains unanswered as there are ambiguous results in the theory of endogenous merger formation. The empirical observations also do not support the theory that low-performing firms are the preferred target for acquisitions.
Download or read book Mergers and Acquisitions Types and Motivations for a Deal written by Kristina Kraft and published by GRIN Verlag. This book was released on 2016-05-24 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2016 in the subject Business economics - Operations Research, Heilbronn University of Applied Sciences, language: English, abstract: Mergers and acquisitions have been taking place since decades and will continue. There are a lot of facts about benefits, about the risks or new methods to be profitable in a merger or an acquisition. A lot of literature shows us that more than about 60% of the mergers and acquisitions are a failure. Besides, the high failure rates this paper illustrates deal motivations for mergers and acquisitions. This paper was written by an author whose mother tongue is not English. Please excuse any mistakes or inconsistencies.
Download or read book Horizontal Mergers Without Synergies May Increase Consumer Welfare written by Johan Stennek and published by . This book was released on 2001 with total page 13 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Economic Assessment of Mergers Under European Competition Law written by Daniel Gore and published by Cambridge University Press. This book was released on 2013-04-25 with total page 559 pages. Available in PDF, EPUB and Kindle. Book excerpt: Provides a clear, concise and practical overview of the key economic techniques and evidence employed in European merger control.
Download or read book Horizontal Mergers Entry and Efficient Defences written by David M. Spector and published by . This book was released on 2001 with total page 18 pages. Available in PDF, EPUB and Kindle. Book excerpt: It is shown that if firms compete in quantities and marginal costs are nondecreasing, any profitable merger failing to generate technological synergies must harm consumers through higher prices, irrespective of entry conditions in the industry. However this result does not hold if products are differentiated and firms compete in prices. The implications for merger policy are discussed. Keywords: Horizontal mergers, competition policy, oligopoly theory. JEL Classifications: D43, K21, L13, L41.
Download or read book The Impact of Horizontal Mergers and Acquisitions in Price Competition Models written by Awi Federgruen and published by . This book was released on 2011 with total page 17 pages. Available in PDF, EPUB and Kindle. Book excerpt: The question of what impact mergers and acquisitions have on key equilibrium performance measures is fundamental to our understanding of competitive dynamics in an oligopolistic industry. We address these questions in the context of price competition models with differentiated goods and asymmetric firms allowing for general non-linear demand and cost functions merely assuming that both the pre- and post-merger competition games are supermodular along with two minor technical conditions. We show that, in the absence of cost synergies, post-merger equilibrium prices exceed their pre-merger levels. Moreover, the post-merger equilibrium profit of the merged firms exceeds the aggregate of the premerger equilibrium profits of the merging firms. The equilibrium profit of the non-merging firms increases as well. We establish our results, at first, for settings where each firm in the industry offers a single product; we then generalize them to industries with multi-product firms. We also derive conditions under which cost synergies, by themselves, result in lower equilibrium prices than otherwise observe post-merger, and discuss how the combined effect of increased market concentration and cost synergies can be assessed efficiently.
Download or read book The Synergy Solution written by Mark Sirower and published by Harvard Business Press. This book was released on 2022-03-15 with total page 238 pages. Available in PDF, EPUB and Kindle. Book excerpt: The new M&A bible. Few actions can change the value of a company—and its competitive future—as quickly and dramatically as an acquisition. Yet most companies fail to create shareholder value from these deals, and in many cases they destroy it. It doesn't have to be this way. In The Synergy Solution, Deloitte's Mark Sirower and Jeff Weirens show acquirers how to develop and execute an M&A strategy—end to end—that not only avoids the pitfalls that so many companies fall into but also creates real, long-term shareholder value. This strategy includes how to: Become a prepared "always on" acquirer Test the investment thesis and DCF valuation of a deal Plan for a successful Announcement Day, and properly communicate synergy promises to investors and other stakeholders Realize those promised synergies through integration planning and post-close execution Manage change and build a new, combined organization Sirower and Weirens provide invaluable background to those considering M&A, laying out the issues they have to consider, how to analyze them, and how to plan and execute the deal effectively. They also show those who have already started the process of M&A how to maximize their chances of success. There's an art and a science to getting mergers and acquisitions right, and this powerful book provides the insights and strategies acquirers need to find success at every stage of an often complex and perilous process.
Download or read book Post merger Synergies Acquirer target Connections and Target CEO Retentions Across Types of Mergers and Acquisitions written by Mai Vu and published by . This book was released on 2020 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis comprises three related empirical studies on corporate governance and value creation in mergers and acquisitions (M&As). The first study examines sources of post-merger synergistic gains across types of mergers being horizontal, vertical, and conglomerate mergers. Potential synergies from M&A deals include operating synergies and financial synergies. This study finds that operating synergies (revenue-based or investment-based or cost-based synergies) are gained in horizontal and vertical mergers, while financial synergies are gained in three types of mergers. The second study investigates whether connections (including past and current connections) between directors and top executives of the acquirer and the target firm affect post-merger synergies in M&A deals and whether these impacts differ across the three types of mergers. The results show that acquirer-target past connections have negative impacts on operating synergies (revenue-based and cost-based synergies). By contrast, acquirer-target current connections have positive impacts on operating synergies (investment-based and cost-based synergies). These negative and positive effects of past and current connections are larger in vertical mergers than in horizontal and conglomerate mergers. Lastly, the third study examines the impact of target CEO retentions on M&A performance and whether past and current connections between the acquirer and the target firm enhance or mitigate this impact. This study also tests these effects in horizontal, vertical, and conglomerate mergers. The empirical results show that target CEO retentions negatively affect the shareholder wealth of the acquirer and the target firm, which is measured by the cumulative abnormal announcement returns (CARs). This study also finds significant evidence that acquirer-target past connections enhance the negative impact of target CEO retentions on the acquirer and the target CARs. These negative effects are significant in vertical mergers, but not in horizontal and conglomerate mergers. Overall, these studies contribute to the prior literature by providing further insights into the factors that may lead to value creation or destruction in M&A deals.
Download or read book Horizontal Mergers written by William Blumenthal and published by American Bar Association. This book was released on 1986 with total page 356 pages. Available in PDF, EPUB and Kindle. Book excerpt: Number 14 in the Antitrust law Section monograph series, this work summarizes the state of the law in every area affecting semihorizontal, conglomerate and vertical mergers, and was prepared as a companion to Monograph 12.
Download or read book Comment on Mergers in Patent Contest Models with Synergies and Spillovers written by Bernd Schauenberg and published by . This book was released on 2006 with total page 4 pages. Available in PDF, EPUB and Kindle. Book excerpt: Peter-J. Jost and Claus van der Velden, the authors, discuss a very interesting problem. They ask whether horizontal mergers may be profitable. Their starting point is a well-known result from Salant, Switzer, and Reynolds (1983). They show in a conventional Cournot oligopoly framework that a horizontal merger can hardly be profitable for the merging firms. The merging firms, the insiders, realize some cost advantage after the merger and therefore reduce their output. The non-participating firms, the outsiders, realize that aggregate demand does not change due to the merger and expand their output, given the aggregate output of the insiders. Thus, the sum of the profits of the insiders decreases. When the profit reduction due to the output decision of the outsiders is greater than the cost efficiencies that motivated the merger, then the sum of the insiders' profits may be smaller after the merger.The authors examine a research-intensive industry. There are n firms engaged in a patent race. Winning the race results in a large first-mover advantage that may endure for some years. The incentives to innovate are without any reasonable doubt very high. But on the other side, the firms may have an incentive to economize on costs. Depending on either the industry effects or the state of scientific progress, Ramp;D expenditures may be very high for a single firm. These expenditures can be the motive for some of the involved firms to consider a merger. Thus, the authors discuss the trade-off between an incentive to innovate and an incentive to economize on costs.
Download or read book The Impact of Horizontal Merger and Acquisitions in Price Competition Models written by Awi Federgruen and published by . This book was released on 2014 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: The question of what impact mergers and acquisitions have on key equilibrium performance measures is fundamental to our understanding of competitive dynamics in an oligopolistic industry. We address these questions in the context of price competition models with differentiated goods and asymmetric firms allowing for general non-linear demand and cost functions merely assuming that both the pre- and post-merger competition games are super modular along with two minor technical conditions. We show that, in the absence of cost synergies, post-merger equilibrium prices exceed their pre-merger levels. Moreover, the post-merger equilibrium profit of the merged firms exceeds the aggregate of the pre-merger equilibrium profits of the merging firms. The equilibrium profit of the non-merging firms increases as well. We establish our results, at first, for settings where each firm in the industry offers a single product; we then generalize them to industries with multi-product firms. We also derive conditions under which cost synergies, by themselves, result in lower equilibrium prices than otherwise observed post-merger, and discuss how the combined effect of increased market concentration and cost synergies can be assessed efficiently.
Download or read book Essays on Horizontal Mergers and Antitrust written by Przemyslaw Jeziorski and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis contributes to understanding the economics of mergers and acquisitions. It provides new empirical techniques to study these processes, based on structural, game theoretical models. In particular, it makes two main contributions. In Chapter 2, I study the issues arising when mergers take place in a two-sided market. In such markets, firms face two interrelated demand curves, which complicates the decision making process and makes standard merger models inapplicable. In Chapter 3, I provide a general framework to identify cost synergies from mergers without using cost data. The estimator is based on a dynamic model with endogenous mergers and product repositioning. Both chapters contain an abstract model that can be tailored to many markets, as well as a specific application to the merger wave in the U.S. radio industry.
Download or read book Pre emptive Horizontal Mergers written by and published by . This book was released on 2007 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Horizontal Merger Guidelines written by United States. Department of Justice and published by . This book was released on 1992 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:
