We are living in a multi-polar world where the demand and supply is constantly growing as well as shifting around the world. Day-by-day, organizations are becoming more complex than ever before. It is not just managing but it is managing smartly that is required to attain the competitive position. Today, Mergers and Acquisitions (M&A) is considered as a new wave for a new century. Various strategies are applied to achieve it. M&A is the key corporate strategy that companies use for purposes like expanding their operations to increase long-term profitability.
In the era of globalization and fast movement of business activity, every organization is trying to wet their feet in profits. The strategies that are correct today would become absurd tomorrow. It all depends on the strategies adopted by the top management and its implementation that matters especially in case of Mergers and Acquisitions (M&A).
Nowadays, a complex web of interconnections is bringing new opportunities to the companies and individuals around the world. It has been observed that the firms from emerging economies are expanding at a speed and scale that is transforming the total nature of global businesses. A company is an entity which must respond to both internal and external pressures. A company is born, struggles and grows to capture the largest extent of market possible to stand on the top. In this process it takes many routes to spread its wings. One of the important paths it takes is the M&A way.
M&A are considered to be an essential strategy for any corporate evolution. It is an inevitable phenomenon. Effective M&A begin with a strategic vision. The strategist's work is to challenge the prevailing set-up with a single question, `Why?', and to ask the same question as many times as necessary to make the future as clear as the present for managers at all levels. The strategists or decision makers must have a clear vision of how synergy will be created in the combined organization and how positive outcomes will be obtained. Then this vision is carefully worked out which includes ethical, financial and legal obligations. As many M&A are undertaken to achieve market power, a lot depends on the strategies adopted and implemented. Many strategies are impelled by various internal and external factors like economic, cultural, rationalization of business, government rules and regulations, competition, technological revolution, globalization, etc.
In fact, today it is not just a merger boom, it is a massive restructuring. Restructuring is a strategy by which a company can change its business as well as its financial structure. Restructuring is one of the best strategies for companies to create maximum value for their stakeholders. GE has witnessed a tremendous growth during the tenure of Jack Welch (1981-2001) due to the effective usage of restructuring strategies. There are various forms of restructuring, like expansion, sell-offs, corporate control, change in ownership structure, etc. Companies can expand through many strategies, like M&A, tender offers, joint ventures, etc. A merger means any transaction through which two or more companies integrate their operations on a co-equal basis. These mergers can be classified as horizontal, vertical, or conglomerate mergers.
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