Mergers and acquisition Essay Example | Topics and Well Written Essays - 2000 words

Mergers and acquisition - Essay Example Such companies resort to such strategy for companies to have powers over suppliers, buyers or competitors, to benefit from experience curve effects and to reduce unit costs, to turn around opportunities as in the case of Morrison’s and Safeway, as a response to turbulence, technological or regulatory and as sometimes as response to acquisitions by competitors. Reality however has a different way of validating what managers and chief executive officers believe about the prospects of merger or acquisition. It is found through surveys that not all mergers deliver the value added that is expected. This is confirmed by www.olin.wustl.edu/discovery/feature in its article on Making Mergers Work. Olin School of Business (n.d.) said that whether judged by the growth of shareholder value or by the new company’s performance within its industry, the results of mergers and acquisitions have been disappointing. It the suggested to consider the AOL-Time Warner mismatch and the fiasco at WorldCom, a company that failed to integrate its many acquisitions. It further mentioned a 1999 study published in the Harvard Business Review, which found that only 21 percent of acquisitions in several industries could be viewed as clear successes. Olin School of business (n.d.) telling every body that in other words, nearly 80 percent of those acquisitions were either disappointing or clear failures. It then asked the question: â€Å"How can such a commonly practiced, promising business strategy so often end in disaster?† The Harvard Business Review survey, according to Olin School of Business (n.d.) from CFOs surveys conducted from the Forbes 50 revealed the top 10 roadblocks to achieving synergies from their answers as follows: The Olin School of Business (n.d.) then mentioned that The Society for Human Resource Management (SHRM) Foundation was intrigued