Analysis of mergers and acquisitions in international business. Mergers and acquisitions in international business. Main trends in international mergers and acquisitions at the current stage of development of the world economy

Mergers & Acquisitions (M&As) are transactions that, along with the transfer of ownership rights, imply, first of all, a change in control of the enterprise (Corporate Control). Consequently, the acquisition of minor, incl. focused solely on obtaining speculative income, shareholdings on the part of individuals and/or institutional investors (portfolio investments) do not apply to them.

The concept of acquisition covers the acquisition of an entire enterprise, its individual parts, as well as strategic participation in capital (direct investment). Mergers, in turn, represent a special form of takeover in which the acquired company is deprived of its legal independence. Often a takeover is referred to as an acquisition (Takeover), which can be carried out with the support of the target company's management (Friendly Takeover) or against its expressed wishes (Hostile Takeover). In the case where, during a merger, both participating enterprises lose their legal independence and become part of the new company, they often talk about consolidation.

Classification of the main types of mergers and acquisitions of companies.

Depending on the nature of company integration, the following types are distinguished:

Horizontal merger of a company. This is nothing more than a connection between two companies offering the same products. The advantages are visible to the naked eye: opportunities for development increase, competition decreases, etc.

A vertical merger of a company is a combination of a number of companies, one of which is a supplier of raw materials to the other. Then the cost of production is rapidly reduced, and there is a rapid increase in profits.

Generic (parallel) mergers are an association of companies producing interrelated products. For example, a company that produces cameras merges with a company that produces photographic film.

Conglomerate (circular) mergers are an association of companies that are not interconnected by any production or sales relations, that is, a merger of this type is a merger of a company in one industry with a company in another industry that is neither a supplier, nor a consumer, nor a competitor.

Reorganization is a merger of companies involved in different areas of business.

According to analytical estimates, about fifteen thousand M&A transactions are concluded annually in the world. The United States occupies the leading position in terms of transaction amounts and volumes. Obvious reasons: today the US economy is experiencing perhaps the most favorable period (at the moment the situation is worsening due to the economic crisis). All free cash Smart people invest in business. It is logical that investors seek to maintain and stabilize direct control over the use of their finances. The best option This is achieved by direct participation in the management of the company. Therefore, merging companies is one of the investor’s opportunities to manage their capital personally.

By geographical basis transactions can be divided into:

Local;

Regional;

National;

International;

Transnational (with participation in transactions of transnational corporations).

Depending on the attitude of the company’s management personnel to the merger or acquisition transaction, the following can be distinguished:

Friendly;

Hostile.

By nationality we can distinguish:

Internal transactions (that is, occurring within one state);

Export (transfer of control rights by foreign market participants);

Imported (acquisition of control rights over a company abroad);

Mixed (with the participation of transnational corporations or companies with assets in several different countries in the transaction).

Impact on the economy:

A number of economists argue that mergers and acquisitions are a common phenomenon in market economies and that ownership rotation is necessary to maintain efficiency and prevent stagnation. Another part of managers believe that mergers and acquisitions “kill” fair competition and do not lead to development national economy, as they destroy stability and confidence in the future, diverting resources to defense. There are conflicting opinions on this matter:

Lee Iacocca, in his book “Manager's Career,” condemns mergers and acquisitions, but calmly looks at the creation of super-concerns as an alternative to M&A.

Yuri Borisov in his book “Russian M&A Games” described the history of the redistribution of property in Russia and the creation of private monster companies after privatization through mergers, acquisitions and forceful raiding as a natural process.

Yuri Ignatishin in his book “Mergers and Acquisitions: Strategy, Tactics, Finance” considers M&A transactions as one of the tools of a company’s development strategy, which, if used correctly and carefully, can give a synergistic effect.

In a broad sense, mergers and acquisitions also mean the creation of strategic alliances with other companies and the separation of assets (Divestitures). Most often, strategic alliances are created on the basis of mutual participation in capital, or with the founding of joint ventures (Joint Ventures) through contributions to a common subsidiary. The most common form of divestiture is the sale of an existing subsidiary to another company. Sometimes part of an enterprise is separated separately as an independent company (“spin-off”) and the shares in it are proportionally distributed among the shareholders of the parent company (Spin-Off). If at the same time we're talking about about the liquidation of the entire parent enterprise, they talk about split-up. It is also possible to legally separate part of an enterprise by exchanging the parent company's shareholders with their shares for shares of the new company (Split-Off). In this case, the parent company can sell shares of the allocated company to a third party and thereby receive additional capital (Equity Carve-Out).

Buying a business is usually done by purchasing shares (ShareDeal), which are offered either on an exchange or over-the-counter. When purchasing legally dependent shares, an alternative is the transfer of the corresponding property items (AssetDeal). In contrast to Share Deal, with Asset Deal there is a certain opportunity to carry out a transaction without its approval general meeting shareholders.

Currently, a significant number of large mergers and acquisitions are international in nature and are therefore often carried out in accordance with international, mainly Anglo-Saxon customs. Let's look at the most important of them.
Organization of transactions

Used in mergers and acquisitions various ways company assessments, the contents of which are described in detail in the relevant literature. But since often not all the information necessary and reliable for assessing the value of a company is available, the assessment of the company’s value is ultimately more art than science (Garbage In - Garbage Out). In practice, several valuation methods are used in parallel and their results serve to determine the actual value of the company.

In Anglo-Saxon countries, Due Diligence has long been a key element of the acquisition process, which allows potential buyers to qualitative analysis of the acquired enterprise.

During Due Diligence, everyone interested in purchasing receives access to a standardized set of data. In particular, as part of Due Diligence, as a rule, the following are provided:
general information about the company: registration statement, charter, information about managers, company structure, affiliated companies, etc.
information about the property status and obligations of the company: a list of all tangible and intangible assets, information about existing short-, medium- and long-term obligations (indicating debtors and creditors, interest rates, payment terms), mutual obligations within the company, etc.
financial statements: annual and quarterly balance sheets, profit and loss statements, auditor's report, etc.
existing agreements with the staff and trade unions within the framework of labor legislation, pensions, etc.
other contractual obligations and rights: agreements within the company, lease agreements, agreements with clients and suppliers, etc.
information about possible legal processes (civil, labor, tax, administrative, etc.)

The buyer often checks the reliability of the information provided as part of Due Diligence, as well as the validity of the expected purchase price, with the involvement of various consultants.

The auditors and lawyers involved in the acquisition of a company are usually involved in optimizing the legal and tax aspects of the transaction. An important fundamental decision in this regard is the choice between Share Deal and Asset Deal. When purchasing shares, the tax environment of the acquired company, as a rule, is preserved and therefore there are fewer opportunities for optimization than the direct purchase of part of the property. With an Asset Deal, it is possible, for example, to exclude certain property and liabilities from the transaction, thereby reducing tax payments.

One of the advantages of Share Deals is that the management of the target company can be excluded from direct influence on the execution and execution of the transaction and, at the same time, it is possible to avoid the influence of existing conflicts of interest between the owner and management of the company. Thus, hostile takeovers occur, as a rule, in the form of Share Deals, since they are directed directly against the interests of management. At the same time, there is a danger that the remaining minority shareholders may challenge the rights of the buyer, complicating the transaction.

In the USA, financing of acquisitions (in particular, hostile ones) is often carried out through the placement (sale) of highly profitable valuable papers(Quasi-Equity, JunkBonds), while the degree of debt of the enterprise increases significantly. Thus, one of the well-known methods of financing - Leveraged Buy Out (LBO) forces management to a radical program of company restructuring (Restructuring), necessary to ensure the ability to fulfill obligations on high interest payments by increasing business profitability, thereby preventing possible bankruptcy of the company. At the same time, the interests of employees, customers and suppliers are often taken into account to a lesser extent.

Mergers and acquisitions are currently one of the key aspects activities investment companies and banks providing advisory and other services in the field of corporate finance.

In addition, services for organizing mergers and acquisitions are provided, along with investment banks, by specialized departments of universal banks and consulting companies, as well as legal and specialized companies (M&A-Boutiquen). They typically represent the interests of one of the parties involved and provide support to the client at every stage of the process. In contrast, a number of companies (brokers) mediate between the parties involved and, as a rule, receive compensation from each party. Their efforts are concentrated mainly on establishing contacts and are limited in most cases to transactions of low value and of a local nature.

Due to legal restrictions on transactions using insider information, companies and banks are forced to separate consulting activities from their own and other operations on the market. As a result, the M&A industry has developed its own distinct corporate and industry culture.

Professional consultants have detailed knowledge of national and international mergers and acquisitions customs, which allows them to more effectively organize and implement the acquisition process. As a rule, their activities include, along with strategic consulting (in particular, structuring the acquisition process, assessing the value of a business, collecting information about potential investors, negotiating, information support for clients), and also the technical execution of the transaction.

By engaging consultants, the parties involved seek to avoid unnecessary delays in transactions, unfavorable terms of the contract, possible liability risks, as well as post-contract integration problems, which ultimately helps to maximize/minimize the sales price/acquisition price. In addition, the acquired company often engages consultants to implement protective measures (AntiRaid) or to verify the validity of the proposed price.

Specialized companies in the field of providing mergers and acquisitions services, as a rule, operate successfully in the market due to a certain industry or regional specialization, as well as when carrying out medium-sized transactions. In turn, specialized departments of universal commercial banks often provide similar services to corporative clients as one of the elements comprehensive service.

Consultants act as a partner to the company's management, providing their support in managing the process of acquiring/selling a business using their expert knowledge regarding the technical execution of the transaction and the specifics of the industry.

The quality of a consultant is determined by his ability to determine best conditions implementation of the transaction. Also essential is the so-called Closing competence, i.e. the ability at the decisive moment to push the client to actually carry out the transaction. Successful execution of a merger and acquisition requires, along with strategic competence and technical knowledge of the details of the process, also the ability to attract various specialists (lawyers, auditors, etc.) to optimize the legal and tax aspects of the transaction.

The selection of a consultant is carried out through a careful selection process (BeautyContest). All applicants, as a rule, receive a standardized information package about the planned transaction with an offer to introduce the company to participate in the competition. Assessing the attractiveness of a particular company as a consultant in a planned transaction is carried out based on a discussion of the following aspects:
Project plan: step-by-step description of the transaction with deadlines for completing each stage, participation (involvement) of company employees and on-site presence of the project team.
Transaction partner: selection of possible candidates for the transaction, possible motives for the acquisition and, accordingly, sale, registration of the process.
Specifics of the project team: composition and availability of necessary experience among employees (knowledge of the industry, ability to complete assigned tasks), recommendations (TrackRecord), possibility of attracting additional experts (lawyers, management experts, etc.).
Fee amount

The execution of an agreement for the provision of consulting services is carried out after the company has been provided with the appropriate instruction (Engagement Letter) to participate in the transaction.

The consultant's remuneration typically consists of a fee, the amount of which depends on the success of the transaction (“success fee”). For example, by acquired companies it is set as a certain percentage of the proceeds from the sale. If the transaction has a relatively small value, as a rule, it is agreed minimum size fee for its successful implementation (MinimumSuccessFee). Acquiring companies often, when engaging consultants, provide financial incentives for paying a lower purchase price, such as a percentage refund of the difference between the maximum expected payment price and the actual price paid. It should be noted that the Lehman scale, which established the rule 5-4-3-2-1, was previously widely used in determining the amount of royalties paid. Thus, the remuneration amount is 5% for the first million, 4% for the second million, 3% for the third million, 2% for the fourth million and 1% for the remainder of the purchase price. Currently, this rule is at least used as a starting point in fee negotiations. At the same time, the fee big deals in Emerging Markets often comes with higher fees, while smaller deals in mature markets may be priced lower.

Along with the size of the transaction, the amount of the fee is influenced by a number of other factors, such as the complexity of the transaction, the expected period of the merger, the reputation of the consultant and the overall profitability of the project.

In addition to the fee, the amount of the advance payment (RetainerFee) is agreed upon, which is counted towards the fee upon successful completion of the transaction, as well as additional expenses (travel expenses, expenses for Information Support etc.). In some cases, the amount of compensation (commission) in the event of (early) refusal to complete the project by the client or the opposing party is stipulated (usually hourly compensation).
Creating value

The growth of a company's value largely presupposes the presence of value-oriented management of the corporate investment portfolio, incl. when purchasing and selling, both tangible and intangible assets. In this regard, mergers and acquisitions are not in themselves the ultimate goal of transformation, they are always just a means to an end.

The assessment of a proposed merger and acquisition begins with a detailed analysis competitive environment. It is produced either by our own design team or with the assistance of a consultant.

At the same time, the increase in the value of the company, as well as potential threats of its reduction, are on both the active and passive sides of the enterprise’s balance sheet.

In particular, the following points and factors are of greatest importance in the asset balance sheet of an enterprise:
Geographical and product-related size of markets (determined, among other things, by the possibility of the emergence or availability of substitute products and the degree of substitutability, i.e. price and cross elasticity of demand);
Maturity of the product range and customer preferences;
Potential for competitors to expand productivity and product range (short-term and long-term price elasticity of supply), as well as other strengths and weak sides competitors;
Presence of entry barriers in the relevant market;
Competitive and supply conditions in factor markets, as well as costs associated with market exit barriers;
Legislative and other (including political) restrictions on the market activity of an enterprise (competition policy, administrative intervention, etc.).

On the liability side of the enterprise's balance sheet, it is necessary to take into account, in particular, the following factors:
The impact of capital costs and the possibility of changing the capital structure;
The profitability of the company and the risk of its bankruptcy;
Future tax liabilities;
Advantages and disadvantages of the financing methods used;
Access to financial markets.

Acquisitions in general can be based on both economic and financial motives. Financial benefits can indirectly contribute to lower capital costs, increased future net cash flows (Netto-Cash Flows) and increased company value. Among the economic incentives, the main one is the synergy effect, as well as a number of other potential opportunities, including:
Achieving economies of scale and, accordingly, reducing fixed costs (Economies of Scale);
Reducing costs by expanding the range of products (Economies of Scope) or integrating production activities along the value chain (Economies of Vertical Integration).
Advantages of specialization and cost reduction effects in operational or administrative areas;
Obtaining new sales channels for products and providing access to untapped (new) markets and technologies;
Increasing market control, increasing market share - taking into account possible negative political and legislative consequences that limit the use of market power (for example, restrictions on competition);
Increasing market entry barriers for potential competitors by creating excess capacity, additional product differentiation, etc.;
Improving the quality of management in the acquired (target) enterprise.

It should be noted that the economic benefits of an acquisition are often combined with losses in operational efficiency due to the difficulties of integrating different corporate cultures. In addition, with the complication of the united structure, there is an increase in the administrative apparatus, bureaucratization and a decrease in business activity separate divisions.

The main prerequisite for mergers and acquisitions is ultimately the different valuation of the object by the buyer and the seller. Sometimes this is purely due to misjudgment. In the longer term, the validity of the transaction is related to the assumption that the buyer can better realize the economic and financial growth potential of the company. At the same time, various empirical studies show that shareholders of acquired enterprises, as a rule, have more benefits from the transaction, while the buyer often cannot significantly improve its profitability over a long period. This can be explained, for example, by the fact that the seller can often pocket potential increases in value as part of price negotiations.

The buyer and target may operate in the same market (horizontal merger), at different stages of value creation (vertical) or in unrelated markets (conglomerate). Direct economic advantages predominate in horizontal and vertical mergers, while in conglomerate transactions they are often justified by financial advantages. International transactions (foreign direct investment) are characterized by relatively higher current costs (ManagingataDistance) and often lead to increased competition and restructuring of enterprises located in the local market.

Potential growth in a company's value can be associated either with organic development through investments (internal growth) or through acquisitions (external growth). The attractiveness of an acquisition increases with the complexity of the company competitive advantages(CompetitiveAdvantage).

Acquisitions often require a shorter period of time to develop new products and therefore enter new markets, and often involve lower business risk. However, as already noted, integration problems can lead to smaller value increases in the medium and long term compared to organic growth.
The Mergers and Acquisitions Process from a Seller's Perspective

Let's look at some of the most important stages of mergers and acquisitions.

The seller is interested in maximizing the proceeds from the sale of the business and therefore has an incentive to set future Cash Flows too high. In this regard, the role of the consultant in preparing a transaction is to check for reliability (Due Diligence) various data of the enterprise (balance sheet, profit and loss statement, planned Cash Flow) and bring them in accordance with reality. In addition, the consultant is responsible for ensuring that information about the proposed sale of the business is available to third parties. It is important that the information provided about the company being sold does not contradict other information about the company’s market position and strategy. The consultant then determines the value of the company, which is taken into account by the client when calculating potential synergy (Synergy) and serves as the basis for upcoming negotiations on the total value of the transaction.

In practice, the consultant draws up an agreement with the client in such a way that the risk of liability for errors or unsatisfactory results of preparing a transaction in many cases is shifted to the shoulders of the seller. This certainly helps improve the quality of information provided by the client.

The consultant then collaborates with the client to create an information memorandum (in industry jargon, Equity Story) that contains key balance sheet items and a description of the company's market position, its strategic advantages, and possible directions for potential business development for potential buyers. The central qualitative criteria are the reliability, completeness and persuasiveness of information, incl. presentation of possible company development scenarios.

The client's goal is to identify and notify the group of possible buyers as fully as possible. Therefore, when identifying possible interested parties in a purchase, the consultant uses wide range professional sources of information, including various bases data, industry publications, exhibitions, reference agencies and the Internet.

The consultant prepares an initial list of potential buyers (the so-called Long List), incl. their profile is compiled, financial opportunities for investing capital, strategic compatibility are assessed, and for each specific transaction other important criteria are taken into account depending on the size of the given list of companies. Then, together with the client, they are classified into groups using certain selected criteria; the most attractive companies are included in a separate list (Short List). At the same time, it is advisable to focus on the potential for realizing synergy, since this will contribute to achieving more high price business sales.

Selected potential buyers are sent an offer with anonymized key data of the company for sale (the so-called short profile) to determine their possible interest in acquiring the company.

If the answer is positive, companies interested in purchasing receive an information memorandum. Previously, they sign a confidentiality agreement, which stipulates the parties’ obligation to non-disclose information received within the framework of negotiation process. For example, it is stipulated that in the event of early termination of negotiations, it is necessary to return or destroy all received documents.

Potential buyers, after receiving the information memorandum, are invited to submit their proposals (without obligation) for the transaction within a certain period, on the basis of which the seller preliminarily determines the most attractive candidates. At the same time, the seller must ensure that competition between potential buyers and, accordingly, the proposed purchase price of the company are not reduced.

At the next stage, potential buyers have the opportunity to study the company in more detail (Due Diligence), incl. an inspection of the enterprise is carried out, a meeting is organized with management, and they are also provided with a room (Data Room) with access to factual (legal, financial and other) information about the enterprise.

The volume and quality of information provided by the seller at this stage is, of course, of significant importance, since hiding important information by him, as a rule, is perceived negatively and reduces buyers’ interest in the transaction. On the other hand, high transparency can lead to the availability of important information to competitors.

After Due Diligence is completed, potential buyers refine and resubmit their transaction proposals, which serve as the starting point for further negotiations. As a rule, a closed auction (Sealed Bid Auction) is organized, in which the received bids are not publicly announced, the number of buyers and the degree of competition between them at the end of the auction is also not announced by the seller. The seller announces the highest offer, then a new auction is held. As a rule, this form of bidding helps to improve the previous offer of buyers, corresponding to the seller’s idea of the level (or higher) of the minimum transaction price.

As a result of the auction, the seller chooses the best offer and undertakes to suspend negotiations with other buyers. In addition, it is possible that a potential buyer sets an attractive offer during the bidding process (Preferred Bidder). If, from the very beginning, the possibility of competition with other buyers for a better offer is excluded (Preemptive Bid), the seller directly proceeds to the final stage of the transaction.

The potential seller at the final stage of the transaction, as a rule, instructs his auditors and lawyers to conduct further Due Diligence in order to double-check the previously obtained information that represents the basis for the final purchase and sale agreement. At the same time, it is analyzed actual information in comparison with the data of the first Due Diligence, a description of the financial and economic situation of the acquired enterprise is given. Potential buyer during this period, maintains free access to all internal company information.

During this phase, both contracting parties discuss all information related to the transaction.

The final price may differ significantly from that agreed upon in the preliminary agreement if repeated Due Diligence has revealed new significant data about the object of sale.

Completion of the transaction (Closing M&A Deals) is associated with payment of the agreed price. In this case, the contracting parties may sign a number of additional agreements, which, for example, provide for restrictions on competition between companies, in particular, the seller is prohibited from operating in the same industry for a certain period or poaching employees of the sold enterprise is not allowed. At the same time, buyers strive to prevent leakage of important information to competitors.

In conclusion, it should be noted that the distribution of risks during mergers and acquisitions can be adjusted by including various obligations in the contract, incl. provision of guarantees in favor of the buyer. As a result, the final result of the transaction can significantly worsen the seller’s position and, in connection with this, a distinction is made between the sales price specified in the contract and de facto paid by the buyer.

Acquisitions and mergers are often used to structure companies. These are operations of an economic and legal nature designed to unite several organizations into a single corporate structure. The owners of the new business unit are those who have a controlling stake. The purpose of the event is to improve capital efficiency.

What are the main pros and cons?

In an effort to improve their financial results, enterprises are making attempts to unite. Joint management significantly increases the efficiency of organizations. Mergers and acquisitions in Russia, as practice shows, provide an opportunity to adapt to a progressive economic system and gain additional privileges in competition.

The advantages of the merger are obvious:

reducing the time required to achieve a positive effect;
optimization tax base;
geographic expansion of business;
gaining control over tangible intangible assets;
acquisition working capital directly at the previously reduced cost;
instant purchase of a specific market sector.

There are also some disadvantages:

quite large costs related to payment of penalties;
significant difficulties when there are companies in different industries;
possible difficulties when interacting with new employees;
in reality, the deal may not be very profitable.

Features of ongoing processes

The ongoing acquisitions and mergers have their own specifics. In case of a voluntary merger of companies, a new legal entity must be formed. If one enterprise joins another, then the main one retains its essence as a subject. All rights and obligations of subsidiaries are transferred to it.

Merger is the process of combining two or more legal entities on a voluntary basis. After all the documents have been completed, the new one begins to function. The combination can take place according to two scenarios.

Restructuring of companies is carried out with complete liquidation. The resulting enterprise acquires the assets and liabilities of the incorporated entities.
When merging, the rights of existing entities are partially transferred as investment contributions. In this case, the participants retain administrative and economic integrity.

A company takeover refers to the process in which one company buys out another. After registration, she begins to fully control its activities. In this case, the dominant company acquires from 30 percent authorized capital second legal entity.

Classification of merging procedures

Conducted mergers and acquisitions can be divided according to various principles. The type of association is selected depending on the conditions established in the market environment, as well as on the potential opportunities that business companies have.

The table shows the main types of joins.

	Peculiarities
Horizontal	During the process, organizations engaged in the same activities or having a similar technical and technological structure are integrated.
Vertical	Connecting enterprises directly in different industries. This is done to control the previous stages of the production process.
Conglomerate	The operation of combining enterprises in different industries, while they do not have any technological or production similarity.
	Companies developing the same product are merging. For example, a combination of manufacturing enterprises can be carried out mobile devices and software.

Also, mergers and acquisitions are classified according to national and cultural characteristics. If the organizations being restructured are located on the territory of one state, then they are considered national. Their activities do not go beyond the boundaries within which they conduct them. Transnational is an association of entities from different countries. Their number can be unlimited. Multinational corporations are common these days.

Fundamental points of positive effect

In order for acquisitions and mergers to be positive, it is necessary to take into account some factors:

determining the optimal form of association;
speed of connecting middle and senior staff to the process;
the amount of expected capital for integration;
procedure for conducting a transaction;
selection of the main representative for future relations.

During the operation, it is necessary to understand from the very beginning that obtaining a positive result when combining organizations should lead to increased profits. At the entire stage of restructuring, mistakes made should be corrected in a timely manner. Final goal- this is not only the presence of a synergistic effect, but its maintenance for a long time.

Preparing for the M&A Process

At the initial stage, the main tasks are set and ways to solve them are determined. It is necessary to understand whether the goals set can be achieved by alternative methods. To do this, it is necessary to carry out procedures to increase internal potential, develop suitable marketing strategies and other measures that can bring you closer to the planned result.

After this, a search for a suitable company to merge is carried out. Preparation directly for the transaction takes place in three stages.

The field of activity of the enterprise is studied: growth dynamics, possible distribution of potential, impact external factors. The first step is to look at actual assets and liabilities.
Own capabilities are analyzed. In any case, the company must make an unbiased self-assessment. Using the data obtained, you can understand what criteria should be used when choosing an organization.
Possible competitors are being investigated. You can feel all the positive aspects of the merger if you carefully study the potential of your rivals. By assessing them, it is easier to determine the strategic direction.

Analysis of the effectiveness of the completed transaction

There is an opinion that a merger of companies will be a great success if a company from a market sector that is progressively developing is chosen as an opponent. However, this approach is not correct. The final assessment of mergers and acquisitions is made based on various studies:

analysis of the balance of incoming and outgoing transactions;
determining the benefits of integration for all parties;
taking into account the specifics of the association;
identifying the main problems in the field of tax base, personnel and legal restrictions.

Possible negative aspects

Transformations with economic structures can have not only positive, but also negative effects. The studies conducted show completely different results. Analysts came to the conclusion that negative aspects arise for a number of reasons related to each other:

erroneous assessment of the capabilities of the acquired company;
misuse financial resources required for integration;
illiterate steps at the combination stage.

Application in practice

During a period of economic instability in a state, the best way out of the situation is to create an alliance. Such measures will help reduce the cost of assets and unite efforts to survive during the crisis. There are a lot of examples of mergers and acquisitions, but the option with the American company LHC Group deserves special attention.

The presented organization managed to double its value within six months. And this is in a financial crisis. The use of an outsourcing scheme made it possible to increase the structure by 8 economic units in just six months. The financial benefits won made it possible to significantly expand the scope of services. The company managed to find opportunities for progressive development by investing funds, despite negative external factors.

As a conclusion

On the Russian mergers and acquisitions market, the total amount of transactions completed decreased by an average of 29 percent. This is due to a decrease in the volume of operations performed. The Russian Federation's share in the world market was approximately 1.3 percent. Over the past ten years, such low rates have not been observed. As for foreign investment, its volume increased by 40 percent.

480 rub. | 150 UAH | $7.5 ", MOUSEOFF, FGCOLOR, "#FFFFCC",BGCOLOR, "#393939");" onMouseOut="return nd();"> Dissertation - 480 RUR, delivery 10 minutes, around the clock, seven days a week and holidays

Tsensikh Maria Yurievna. International mergers and acquisitions in the global economy: dynamics and problems of their effectiveness: dissertation... Candidate of Economic Sciences: 08.00.14 / Tsenkhnyh Maria Yurevna; [Place of protection: Ros. economy acad. them. G.V. Plekhanov]. - Moscow, 2009. - 195 p. : ill. RSL OD, 61:09-8/2290

Introduction

1. Mergers and acquisitions are an objective trend in the world financial sector 11

1.1. Theoretical aspects of capital consolidation of transnational companies 11

1.2. Analysis of scientific views on the theory of transnationalization of capital 26

1.3. Relevance of sources and characteristics of the synergistic effect 40

1.4. Strategies for consolidating international capital and models for assessing their effectiveness 55

Chapter 2. Features of corporate mergers and acquisitions in the global economy 78

2.1. Main trends in international mergers and acquisitions at the current stage of development of the world economy 78

2.2. Peculiarities legal regulation mergers and acquisitions: Russian and international experience 102

2.3. Methods of financing mergers and acquisitions 118

Chapter 3. Planning a successful international merger or acquisition transaction .131

3.1. Reasons for failure of international mergers and acquisitions 131

3.2. Criteria for the appropriateness of international mergers or acquisitions 136

Conclusion 155

List of used literature 163

Applications 177

Introduction to the work

The relevance of the dissertation research is due to the fact that in the current economic situation in the world, a very acute problem for international capital is overcoming the crisis and getting out of it with minimal possible losses. There is a need to find models and methods for developing companies that are effective in a crisis, solving the problems of maintaining presence in the market, and ensuring uninterrupted production. One of modern methods The solution to the problem of survival for companies is property restructuring and mergers and acquisitions as one of the main elements of increasing the efficiency of use of the company's capital.

International mergers and acquisitions have been carried out quite actively over the past decade, to which the economic literature pays sufficient attention, focusing the analysis on the prospects of these transactions. At the same time, in our opinion, there is a certain lack of empirical data to reflect the impact of such transactions on the national economy.

It should be noted that at present, many Russian enterprises also find themselves in a situation in which a merger or acquisition is a beneficial element of their future development strategy, and sometimes acts as a way to solve more complex problems in a crisis.

Any enterprise has two fundamental options for a growth strategy - its own development based on internal resources or the acquisition of an external asset. In the process of constant development, within the framework of the company’s existing strategy, at each specific moment management determines what is most profitable for it: the acquisition of a new business, or the redistribution of resources within existing activities.

Accordingly, the purpose of acquiring new business through mergers and acquisitions is to create a strategic advantage through the addition and integration of new business elements, which is considered more effective factor than their internal development within a given company.

The company’s ability to determine the most appropriate type of merger and acquisition, to identify the main goals pursued by the parties when making corporate restructuring transactions, allows us to assess with a sufficient degree of accuracy the effectiveness of such a transaction and its possible consequences.

The degree of development of the problem. The methodology and tools for studying the world economic system were considered in their works by Khasbulatov R.I., Bulatov A.S., Liventsev N.N., Martynov V.A., Faminsky I.P., Rybalkin V.E., Polyakov V. V., Shchenin R.K., Khalevinskaya E.D., Smitienko B.M., Fedorov V.P.

IN last years Theoretical works are published directly on international mergers and acquisitions of companies, and the results of empirical research on this topic are also published.

Various problems of the theory and practice of mergers and acquisitions, as well as issues of international capital movement, were considered by Avkhachev Yu.B., Bylynyak S.A., Ivanov Yu.V., Ignatishin Yu., Krasavina. L.N., Pirogov A.N., Rudyk N.B., Semenkova E.V., Smirnov I.G., Slepov V.A., Fedya-kina L.M., Fituni L.L., Shmelev N. P., Novikova E.S., Amelin A.N., Prisekina K.A., Pavlov V.V.

Among foreign scientists, the problems of the world economy and the transnationalization of capital were studied by Birkinshaw J., Bishop David M., Bresman J., Gofan Patrick A., Kruger A, Krugman P., Alexandra Reed Lajoux, Stanley Foster Reed, Robinson J., Rosefield S. Focarelli D, Hanson G, Haspeslag S, Evans Frank C, et al.

For example, Avkhachev Yu.B. explored international mergers and acquisitions and the capabilities of enterprises to integrate into the global economy; Timothy J. Galpin and M. Haldon looked at the problems of integrating corporate cultures and human capital in the process of mergers and acquisitions; Frank C. Evans and David M. Bishop - issues of company valuation and cost aspects of mergers and acquisitions; An assessment of the effectiveness of conglomerate mergers is given in the works of Rudyk N.B.

The problems of managing mergers and acquisitions were studied by Birkin-shaw J., Bresman J., Morosini P., Steger U., Haspeslag et al., whose works also contributed to the study of important aspects of the problem.

The subject of the study of this work is the economic relations that arise in the process of combining assets, capital and liabilities of companies during their mergers and acquisitions.

The object of the study is mergers and acquisitions of individual large companies in developed countries and in Russian Federation.

The purpose of the study is to, based on a comprehensive analysis of the theoretical and practical aspects of the practice of international mergers and acquisitions, identify a number of features of concentration and centralization in the movement of international capital in modern conditions, show their originality and develop reasonable proposals for rationalizing and increasing the economic efficiency of using company combination schemes.

Based on these goals of the dissertation research, the author has set the following tasks:

Summarize the basic theoretical concepts of the processes of mergers and acquisitions of companies in relation to specific conditions;

Identify trends and features of international mergers and acquisitions at the present stage, forms, methods and methods used in these mergers and acquisitions;

Conduct an analysis of the factors and consequences of capital consolidation in developed Western countries, as well as in the Russian Federation in recent years (when production consolidation tools also began to be used);

Identify features financial aspects corporate mergers and acquisitions;

Consider possible methods for assessing the effectiveness and specifics of mergers and acquisitions carried out in the world and in Russia;

Provide an analysis of the reasons for unsuccessful international mergers and acquisitions and develop criteria for the feasibility of such transactions.

The methodological basis of the dissertation research was the fundamental provisions and methodological apparatus of economic theories, theories of the world economy and international economic relations. In the process of work, a systematic approach was used, primarily analysis and synthesis, methods of economic and statistical comparisons were used, comparative analysis and graphical modeling. Taken together, the methods and approaches used in writing the dissertation determined the reliability and validity of the conclusions and practical solutions arising from the content of the dissertation research.

The theoretical basis of the dissertation research was the work of domestic and foreign scientists on the theory and practice of international mergers and acquisitions.

The study used monographs and articles, as well as analytical and statistical materials from Russian and foreign periodicals as sources of information. Factual data was obtained from static materials of investment banks and consulting companies (PricewaterhouseCoopers, Ernst&Young, The Boston Consulting Group).

Materials also used international organizations, primarily the IMF and UNCTAD.

The scientific novelty of the dissertation research lies in identifying the problem of transnationalization of capital during mergers and acquisitions, related to the peculiarities of the legal regulation of the relevant transactions in different countries. The multiplicity of deal structuring factors, the nature of the influence of mergers and acquisitions on economic efficiency movements of international capital. The impact of foreign direct investment on the competitiveness of the national economy is assessed.

The paper proposes a comprehensive method for assessing the success of mergers and acquisitions, based on a comprehensive analysis of the reasons for failed transactions, including financial, information and management aspects.

The most significant results obtained by the applicant:

The classification of international mergers and acquisitions has been supplemented in terms of the legal essence of acquisitions of company finances;

A periodization of types of corporate strategies is given;

Based on a comprehensive study of the international and Russian practice of mergers and acquisitions of companies, the main motives and consequences of their implementation in a number of cases were determined;

Strategies for capital consolidation when carrying out foreign trade activities have been determined (opening branches and representative offices abroad; participation in the activities of organizations in other countries; issue and placement of securities of an organization in foreign markets (IPO); acquisition of enterprises in other countries, or merger with a resident enterprise of a foreign states);

As a result of the analysis of the cyclical nature of mergers and acquisitions, the wave nature of global mergers and acquisitions associated with the general dynamics of global economic development was revealed;

Criteria for the effectiveness of mergers and acquisitions carried out in the world and in Russia are proposed, including the following: assessing the value of the company for shareholders when acquiring new markets or expanding existing ones; the importance of increasing the range of goods and services produced; industry concentration criteria and others;

Methods are proposed that increase the objectivity of calculating the effectiveness of transactions carried out in the world and in Russia, with the participation of non-public companies, in particular: a) calculation of the correction balance, in which investments are reflected at the current value of tangible and intangible assets owned by the company; b) definition of real economic profit companies as the ratio of net cash flow to invested capital; c) use of real economic profit and weighted average capital costs in calculations;

The main trends in international mergers and acquisitions at the current stage of development are identified, including the factor of asymmetry of trends in developed and developing countries;

It was established that the global financial crisis had a negative impact on the dynamics of the development of the global and Russian mergers and acquisitions market; in particular, it was established that in the context of the current economic crisis in 2008, there was a decline in the volume of mergers and acquisitions, due to a general sharp reduction in mutual flows of FDI.

Scientific and practical significance of the research results. The theoretical significance of the study lies in the fact that this study makes a certain contribution to the expansion of scientific knowledge in the field of the theory of international capital movement at the present stage in its specific form, that is, through mergers and acquisitions of agents of production and capital.

The practical significance of the research results lies in the possibility of using the conclusions and recommendations made in the dissertation in the formation of an effective system government controlled processes of transnationalization of capital in the interests of both business and the state of the host party or investor.

The proposed system for assessing the success of mergers and acquisitions, based on an analysis of the extensive practice of large corporations, can be used by companies in the decision-making process for making relevant transactions, as well as in developing financial strategies when entering the market by acquiring companies in the market segments of interest.

The research materials may also be useful for specialists scientific workers, exploring the problems of international capital movement and transnationalization of companies, and can also be used in the educational process in the training and professional retraining of specialists in the global economy and international economic relations.

Approbation of work. The main provisions and conclusions of the dissertation research were presented at international conferences and seminars at the Russian Economic Academy named after. G.V. Plekhanov and the Moscow Academy of Entrepreneurship under the Moscow Government.

The logic and structure of the work are determined by the stated goals, objectives and topics of this study. The dissertation consists of an introduction, three chapters, including 9 paragraphs, a conclusion, and a bibliography of 178 titles. The work contains 17 figures, 7 tables, 8 appendices.

Theoretical aspects of capital consolidation of transnational companies

At the present stage of development of world trade and world economic relations, international consolidation of capital seems to be one of essential tools the process of world financial globalization. At the same time, a trend is emerging towards the financial division of the world between the largest transnational companies (TNCs) and banking and financial groups, each of which has the ability to significantly influence both the spheres of the world economy and its regional and industrial segments. TNCs, stimulating this process, carry out global restructuring and changes in the strategic positions of companies in relevant industries.1.

A very important phenomenon in the field of transnational business at the end of the last century was mergers and acquisitions of companies. A special role in this is played by the competitive strategy, according to which in many industries market share was increased or attempts were made to gain an exclusive position by absorbing competitors. In accordance with this strategy, TNCs must quickly mobilize huge capital. Mergers and acquisitions of TNCs took place particularly dynamically in such areas as banking and insurance, automotive industry, and the oil industry.

In the scientific and specialized literature, mergers in a broad sense are understood as a process during which one company is formed from several companies. However, legal science and accounting require splitting this category into procedures for mergers and acquisitions. The simplest way to describe these two concepts is as follows.

As a result of a merger, several companies are combined into one. In this case, as a rule, there is one “acquiring” company that initiates such a transaction and has more powerful economic potential. Distinctive feature a merger transaction is that the shareholders of the “acquired” company after the merger retain their rights to the shares, but of the new, united joint stock company.

NE. Voronin and M.S. Voronin define a merger as an association of companies or banks, in which one is formed from several companies. In this case, part of the shares of one company is exchanged for all the shares of another company and, as a result, one legal entity is formed from two (or several) legal entities. A merger can also be carried out by exchanging shares of two or more banks for shares of the newly created legal entity.3

Rudyk N.B. believes that a merger is a process when two or more companies arise new company, which transfers all rights and obligations of these two companies. An analysis of the above approaches to defining the concept of merger shows that each of them notes individual features of the process and its consequences. The definition of A.N. Pirogov most broadly reflects the essence of this process, which we will adhere to in our study. According to A. N. Pirogov, a merger is the transfer of all rights and obligations of two or more companies to a new legal entity in the process of reorganization. In a broad sense, a merger is associated with a transfer of control over the activities of companies, which can be both formal and informal5.

The term “merger” in accordance with the current Civil Code of the Russian Federation implies that when two or more companies merge, a new company arises, to which all the rights and obligations of these two or more companies are transferred. Subsequently, these companies cease to exist as separate legal entities. In world practice, such a transaction is often called not a merger, but a consolidation.

In the legislation of leading foreign countries There are two main types of mergers: absorbing and consolidating (combination). With the absorbing type of merger, one of the merger participants (a company or a bank) receives all the assets and liabilities of the companies (banks) joining it, which are then, in turn, disbanded (liquidated). As a result of consolidating mergers, a new company is created that accumulates the assets and liabilities of all merging companies (banks), which are subsequently subject to voluntary liquidation.

If there is currently certainty regarding the term “merger” in Russia, since this form of reorganization is enshrined in Federal law dated December 26, 1995 "About joint stock companies"and its characteristic corresponds to the definition contained in the law of the European Union (merger by formation of a new company)7, then the interpretation of the term "takeover" causes controversy, which will be addressed further. As a result of the takeover, one person gets the opportunity to control the actions of the company, or acquires its assets.

The takeover procedure is distinguished from a merger by the fact that the acquiring (absorbing) company buys all or most of the shares from the shareholders of the acquired (absorbed) company. Thus, the shareholders of the acquired company lose their rights to a share in the capital of the new merged company

Rudak N.B. takeover refers to a transaction conducted through a tender offer. For the purposes of this work, by tender offer we will mean an offer to buy or sell, where the quantity, price and period of time during which the offer is valid are fixed.

A takeover is a tender offer that pits the management of one corporation for a controlling interest in the common voting stock of another corporation.

The corporation making the tender offer is called the acquiring corporation, and the corporation whose controlling interest is being tendered is called the target corporation. In the future, by a controlling stake of ordinary voting shares we will understand such a stake that is sufficient to replace the current management of the target corporation.

Analysis of scientific views on the theory of transnationalization of capital

The problems facing humanity can be understood more quickly and deeply if new ideas are compared with thoughts that arose earlier. To avoid mistakes when solving new problems, one should keep in mind the views, achievements and failures of the thinkers who stood at the origins of economic science. The transnationalization of capital, which largely determines the success of companies in modern world economic practice, has deep historical background. An analysis of views on the development of trade, the expansion of areas of presence, the formation of connections and relationships will allow us to assess the objective essence of the transformation of the world economic system.

The reasons for international capital migration are interpreted ambiguously by economists various directions economic thought. Approaches to explaining this process evolve with changes in economic conditions, scales, forms, mechanisms, and consequences of international capital movements.

Theories of international capital migration were developed within the framework of the neoclassical theory of international trade, the neo-Keynesian theory of economic growth, the Marxist theory of capital export, concepts of the development of an international corporation, and the Q-theory of the dynamics of the investment process.

The aspect of the study of international capital movements directly affected international trade. J.M. Keynes believed that by eliminating the reasons preventing the international movement of capital, the latter could replace trade in goods.

The ideas of neoclassical economists about international capital migration took shape in theoretical system in the 20s of the XX century. The main provisions of neoclassical theory are set out in the works of E. Heckscher, B. Ohlin, R. Nurkse, K. Iversen. Neoclassicists integrated the process of movement of factors of production, including capital, into the theory of international trade. From the standpoint of modern economic theory this is justified because foreign trade and international capital movements have the same economic meaning. Thus, the movement of capital in the form of external loans represents a long-term trade. It does not represent an exchange of goods for goods, but an exchange of opportunities for consumption in the present for opportunities for consumption in the future.

E. Heckscher and B. Ohlin developed the theory of factor proportions, according to which countries are provided with factors to varying degrees and use them in different proportions in the production of goods. Excess or lack of capital is considered by neoclassicals as the reason for its international migration. At the same time, based on the concept of marginalism, they focus on ultimate performance capital, expressed in interest rates.

E. Heckscher substantiated the trend towards international equalization of prices for production factors in the long term. This trend is realized in the process of international exchange and international capital migration. An analysis of the reasons influencing the international migration of capital led B. Olin to the conclusion that in this process it is necessary to take into account factors that interfere with the export of goods and thereby stimulate the export of capital, as well as the desire of firms for more profitable investment capital abroad, investment risk, etc. He believed that the movement of capital occurs from places where its productivity is low to places where it is high. International integration of capital continues until the marginal productivity of capital in different countries is equalized.27

According to R. Nurkse, the export of capital is explained by the difference in interest rates and acts as an alternative merchandise exports. He developed models in which the international movement of capital was associated with technical discoveries, the development of foreign trade, and an increase in the supply of capital.

K. Iversen analyzed not only the essence of international capital movement, but also its mechanism. He differentiated the international movement of capital into real and balancing. Real capital flows are associated with unequal levels of marginal factor productivity in different countries. The balancing movement of capital is determined by the needs of regulating the balance of payments. K. Iversen also studied the consequences of the export of capital, such as increasing the efficiency of production factors due to their more rational combination, and the growth of national income in countries connected by international capital migration.

The neo-Keynesian theory of international capital movement was developed in the late 30s - early 50s of the 20th century under the influence of the views of J. M. Keynes. According to Keynesian theory, the most important condition for macroeconomic equilibrium is the equality of investment and savings. The excess of savings over investment leads the economy away from equilibrium towards recession and unemployment. In such a situation, part of the savings flows beyond national borders. A more significant reason for international capital movement in the Keynesian interpretation is the state of the balance of payments.

The founders of neo-Keynesian theory F. Machlup, E. Domar, R. Harrod analyzed various aspects of this process. F. Machlup, exploring the relationships between capital exports, domestic investments, balance of payments and national income, showed their impact on the economies of countries that export and import capital.

R. Harrod integrated the problems of international capital movement into the theory of economic growth. The export of capital, the formation of savings, and the movement of the balance of payments are linked to his model “ economic dynamics» with growth rates depending on the amount of investment. If savings in a country exceed investment, then the rate of economic growth slows down, the economy moves towards recession, and the tendency to export capital for more profitable use increases.

E. Domar developed a concept in which he considered the impact of investment income from foreign investments on the balance of payments, employment and capital exports. With a higher growth rate of investment income compared to the growth rate of domestic investment, the balance of payments is passive, which contributes to a reduction in employment, business activity, a decrease in GNP, and a curb on exports. With a higher growth rate of domestic investment compared to the growth rate of investment income from foreign investment, the balance of payments is active, which stimulates the growth of employment, GNP, and capital exports. E. Domar came to the conclusion that it was necessary to expand government foreign investments and regulate interest rates on them to ensure a positive balance of payments.

The neo-Keynesian theory of capital export focuses on stimulating business activity in countries that export and import capital. This served as the basis for justifying the policy of assistance to developing countries by developed countries. The acceleration of economic development in these countries is seen as a function of the influx of foreign investment.

Main trends in international mergers and acquisitions at the current stage of development of the world economy

To achieve maximum efficiency in the mergers and acquisitions process, it is necessary to understand the trends, conditions and volumes that exist in the M&A market.

Historically the market corporate control began to develop in the USA at the end of the 19th century. The first mergers and acquisitions resulted in US Steel, Generale Electric, and Eastman Kodak. Since the 80s. XX century The European mergers and acquisitions market is entering an active stage of development.

The market for corporate control went through periods of horizontal integration and the creation of virtually monopoly companies (the beginning of the 20th century), a period of diversification of market risks and the creation of large conglomerate companies, a period of corporate alliances and vertical integration.

Six stages of corporate control transactions can be distinguished: 1. 1897-1904. - horizontal consolidation; 2. 1916-1929 - growing concentration; 3. 1965-1969 - stage of conglomerates; 4. 1981 -1989 - deconglomeration; 5. 1992-2007 - stage of megamergers; 6. 2008 - to present Appendix 3 provides characteristics of these stages.

Our study takes a closer look at the fifth stage of mergers and acquisitions and the current state of the international mergers and acquisitions market.

Beginning of the 21st century can be considered a time of boom in international mergers and acquisitions, which allows us to talk about this corporate strategy investment as the most significant policy in modern international companies. According to UNCTAD, from 1980 to 1999, the annual growth rate of mergers and acquisitions was 42%, with more than 24 thousand such transactions concluded.

It is in the area of mergers and acquisitions that the investment strategies of the largest TNCs are concentrated. An example of this is the acquisition by a British company of the telecommunications sector of the economy Vodafone AirTouch of the German Mannesmann in 2000, the volume of which amounted to $182 billion.

However, the last decade (2000 - early 2009) has been marked by uneven dynamics of mergers and acquisitions. The sharp decline in global mergers and acquisitions in 2001 (by 48% in 2001 compared to 2000) was explained by a drop in the overall level of foreign investment during these years (see Figure 2.1). During the period from 2003 to 2005. There has been a significant increase in the volume of international mergers and acquisitions in developed countries. Their growth in 2004 amounted to 88% compared to 2003 and reached an absolute value of 716 billion dollars, and the number of international transactions over 1 billion dollars increased by 42%, reaching 111. The rise in M&A activity in 2005 was partly due to a rebound in stock exchanges, with 182 cross-border transactions valued at over $1 billion. There was a slight decline in cross-border M&A activity in 2006, with 2007 being the peak year in international M&A activity. mergers and acquisitions (300 transactions over $1 billion). However, this was followed by a sharp reduction in mergers and acquisitions on a global scale, which is explained by the upcoming global crisis and the corresponding reduction in the total volume of foreign investment - by 21% from 2007 to 200878.

A record number of deals were canceled in 2008. The reason is that many companies have difficulty financing such deals and are choosing to play it safe. Since the beginning of 2008, companies have abandoned 1,309 deals totaling $911.0 billion. For example, the refusal of the world's largest mining company, BHP Billiton, to take over Rio Tinto for $147.0 billion in November 2008 was the largest refusal. throughout history.

The takeover of the Swiss mining company Xstrata by Brazilian mining company Vale has failed. And the refusal of the world's largest mining company, BHP Billiton, to take over Rio Tinto for $147 billion in November 2008 was the largest refusal in history.

The financial losses predicted at the end of 2007 were estimated at 400 billion dollars. However, by the end of 2008 they exceeded 1 trillion. USD 80 According to the IMF, expected losses could reach 1.4 trillion. dollars, which will certainly affect the global economy as a whole in the form of a fall in global production and a slowdown in economic growth. The anti-crisis package of measures to support the US economy, where every third bank can survive bankruptcy proceedings, was estimated at $825 billion at the end of January 200982, which will most likely affect the inflation indicators of the world economy.

Reasons why international mergers and acquisitions fail

The main purpose of mergers and acquisitions is to try to improve the business, but numerous empirical studies show a high (over 70%) failure rate of mergers and acquisitions. Research mainly looks at individual components of success or failure and has not yet proposed a single approach based on comprehensive analysis that would take into account various factors that positively and negatively influence mergers and acquisitions of companies.

For example, Thomas Straub believes that the success of a merger and acquisition transaction is a multidimensional function. For a successful transaction, the following key success factors119 must be taken into account: - strategic logic, which is expressed by six determinants: market similarity, market complementarity, similarity of operating systems, complementarity operating systems, market position, and purchasing power; - organizational integration, which is expressed by three determinants: acquisition experience, relative size, cultural compatibility; - financial/price perspective, which is reflected by three determinants: transaction premium, bidder selection process, and Due Diligence.

The above variables affect both the positive and negative outcome of the transaction, which is determined by assessing the implementation of synergies, relative (compared to competition) and absolute success.

Harari (1997) "suggested that the reason for failure lies in the lack of long-term vision by managers, relying only on short-term results, because by buying current competitors, managers aimed to gain market share. In this regard, Harari recommends that companies reconsider their position in the market.

One of the reasons for unsuccessful deals is called “pride of management”121. This phenomenon consists of the idea of luck or even exceptionalism of the manager, which is not always confirmed in practice. Examples of the “pride of management” displayed by senior managers include transactions between Jurgen Shrempp and Daimler-Benz.

Researchers such as Brothers, Van Hastenburgh and Van Ned Wen have attempted to study the reasons why managers persist when most deals fail. In their view, managers quite reasonably believe that it is possible to succeed where others have failed. Examples of successful transactions include Renualt/Nissan, FirstGroup/Ryder Transportation, and Pharmacia/Upjohn.

A positive or negative result very much depends on who evaluates the transaction. This could be an outside researcher or company management.

Researchers Bulmer and Dinnie (1999) identify many reasons why mergers and acquisitions fail. These researchers came to the conclusion that very often short Harari, O. pays too much attention to urgent financial and legal issues, neglecting the strategic direction of the company. This neglect also included a reluctance to clarify leadership issues, and a general lack of communication with key stakeholders during the merger or acquisition process.

According to Gadish and Ormiston (2002)124 there are five main reasons why mergers fail: - poor strategic rationale; - cultural mismatch; - difficulties in organizing the company management process; - poor planning and execution of integration processes; - overpayment for the purchased company.

Of these five reasons why mergers fail, the most important factor The failure of mergers is an unclear strategic explanation that can have an impact both pre- and post-deal. It is emphasized that this factor can lead to other reasons for the failure of a merger of companies.

Lynch and Lind (2002) list other reasons for merger failures such as: post-acquisition integration processes being too slow, culture clashes, and lack of appropriate risk management strategies.

Considering the importance of anchoring strategic planning to a merger or acquisition transaction strategy, it is critical to identify and use effective tool to ensure alignment between the organization's strategic plan and the M&A transaction plan. This tool is called the Due Diligence process.

Also, lessons from past failures in mergers and acquisitions have been explored by Hayward (2002). He concluded that many M&A managers have great opportunities to learn from the lessons of the past, but they rarely do so. Hayward found that firms with small losses in previous acquisitions have an incentive to learn from their mistakes and benefit from subsequent acquisitions. But firms that have had great success or failure also rarely consider their previous experience.

Rowit and Lemire (2003) found that consumers who purchase frequently, regardless of economic cycles, are 1.7 times more successful than those companies that were not such frequent buyers and made from 1 to 4 transactions. They suggest that purchasing frequency increases the chances of success. Contrary to Rovit and Lemire, Hayward finds that acquisition experience is not sufficient to conduct a successful acquisition; however, firms are most successful when they acquire companies in similar businesses. Hayward also finds that acquirers who make acquisitions one after another do not outperform companies that acquire only infrequently. According to Hayward best results reach those companies that take a short break between acquisitions to review past transactions. However, this break should not be too long so as not to forget the lessons of past transactions.

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