Question

Please answer and give an example if appropriate.

How difficult is it for merger and acquisition strategies to create value and which firms benefit the most from M & A activity?

Answer 1

It is right that Merger and acquisition is a good and popular strategy but The difficulties in creating values for merger and acquisition strategies are that paying a too much amount for the merged company due to the incorrect valuation, selecting those targets that are inappropriate means that are not realistic , problems in carefully selection of targets and the problem of implementation of those targets , inability to create targets and there are many other reasons also that create difficulty in the merger and acquisition strategy.

The four major challenges of merger and acquisition are

1. Creating value

2. Supporting the stretch

3. Managing risks

4. Maintaining stability

For example A ltd acquires B lts in 60 lakhs whose net value is of 30 lakhs. A lts thinks that is gives a synergy benefits of 35 lakh but B lts gives no synergy benefits.

There are various law firms that are benefitted most from merger and acquisition activity. These firms are KPMG ,Dilloite etc. And various other firms.