Free Paper Sample on Cross-Border Mergers and Acquisitions

Motivation and Purpose

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Mergers and acquisition are considered to be an important part of the business cycle that business goes through in their usual life cycle. The mergers and acquisition can result in either expansions or reduction in the size of the business depending on the timing and reasons for the decision of merger or acquisition in business. The mergers and acquisitions often result in two or more businesses coming together or one business taking control of another. The existence of mergers is considered as a powerful way of survival of various business thus explaining why Mergers and acquisition are part of the normal business lifecycle (Judd 2016).

For most companies, the use of mergers and acquisition is an important way of expanding their business knowledge for the purpose of acquiring the knowledge that is useful for the expansion. Different businesses choose expansion and mergers for different reasons that vary from an increase in the number of staff, to increase the business size and sometimes increment in the scale of operation (Lebedev et al. 2015). The mergers and acquisition can sometimes result in freezing of an organization. The decision to merge or acquire a business changes so many things about the business spanning from the modes of payment to the scale of operations and even the leadership of the business such that it makes an important subject of study (Lebedev et al. 2015). The need to understand the changes that occur during mergers forms the background of the decision to conduct this research that would aims to elaborate on the mergers and acquisitions by juxtaposing the impact on size, the modes of payment, effects on the status of the business and how to conduct cross-border mergers and acquisition (Judd 2015).

Research Questions

The reasons and purpose of mergers and acquisitions have been viewed from different contexts by researchers, but few of them choose to focus on the perspective of seeking to understand mergers and acquisitions basing their argument on an understanding of the methods of payment together with the status of the business and the how to go about cross-border mergers. In this research, I will ask the most suitable method of payment for companies that have undergone mergers or acquisition. I would focus on why each method of payment would prefer to others which are also available in the business environment. This question would be viewed based on the quickest method of financing a merger and the best methods that would be preferred by the sellers or buyers for transacting with the mergers or acquisitions.

Additionally, this research will investigate and analyze the listing of status for mergers and acquisitions. This listing will involve the position of the mergers in terms of their sizes or scale of production and operation. The listing process would help in explaining the reasons that have resulted in mergers in different companies and how best mergers and acquisitions have been significant in the survival of various organizations. This will also help in understanding the contribution of the mergers and acquisitions in the economy of various nations through their contribution to GDP and other economic drivers (Tarba et al. 2016). This analysis is important because mergers and acquisitions form part of significant institutions that contribute greatly towards employment creation and other socio-economic contributions.

The mergers are not only done in the local landscape thus the need to understand how organizations in different countries can undergo either merger or acquisition by looking at the cross-border merger. This would be analyzed critically to understand the impacts such mergers and acquisitions may have in the global economy. These issues are critically analyzed for the purpose of understanding the importance and significance of mergers not only in the local business environment but also within the global set-up of the business.

Personal Learning Objectives

This research would be important for my understanding of the reasons for mergers in various organizations. This understanding of the reasons for mergers would also allow me to understand the various methods of payment that are used in mergers. My aim would be to understand reasons for the choice of any particular method of payment basing arguments on the importance of each method of payments that makes it preferred for this nature of the business. The intention is to gain a deeper understanding of the mergers and acquisitions by looking at the important issues that make them unique and different from other forms of business. Additionally, I am at understanding the performance of the various mergers all over the world by looking at their listing. My intention to look at the global listing of the mergers and acquisitions also make me want to know the possibility of cross-border mergers and acquisition. I would prove to have achieved these objectives through the discussion of research findings that are supported by most recent research papers in the field of business.

Relevant Past Studies

According to Judd (2016), mergers are known to form a huge section of the world of finance. Mergers involve a combination of two companies whereas acquisition involves a situation in which one company buys or acquire another (40). One organization either gives up a section of value for another or once companies dissolve or are taken up by another in the situation of mergers and acquisitions (Judd 2016). The mergers and acquisitions are important for moving a business into a new market segment that has not been fully exploited (Lebedev et al. 2015). This process is considered extremely important for expansion and development of businesses. Lebedev et al. (2015) state that the new business segment offers a wide business environment that is likely to support the new business or idea for quite some time. The process of mergers is well planned with a focus on future progression and benefit of the business. The planning process requires the availability of lawyers who help solve any legal challenges that may arise since the companies merging have to dissolve some of the terms of operations they had initially and come up with new terms that favor their mutual coexistence.

Mergers and acquisitions are mainly funded through the use of exchange stocks (Huang, Officer and Powell 2016). Huang, Officer and Powell, (2016) presents that the organizations that opt to acquire other organizations must always have plentiful stock before they can be allowed to control others since they would have to exchange the stock for shares of the organization they are acquiring (220). The preference for this mode of payment is due to the low risk involved. The risk is shared among the organizations that are coming together thus impacts of the risks on the organization greatly reduced. Stock overhaul or decline are forces that affect the use of this method of payment (Tarba et al. 2016). Debt payment and use of cash are other methods of payment that are considered for the mergers and acquisitions (Huang, Officer and Powell, 2016).

References

Huang, P., Officer, M.S. and Powell, R., 2016. Method of payment and risk mitigation in cross-border mergers and acquisitions. Journal of Corporate Finance, 40, pp.216-234.

Judd, D., 2016. Mergers and acquisitions. MHD Supply Chain Solutions, 46(1), p.40.

Lebedev, S., Peng, M.W., Xie, E. and Stevens, C.E., 2015. Mergers and acquisitions in and out of emerging economies. Journal of World Business, 50(4), pp.651-662.

Tarba, S.Y., Cooper, C., Sarala, R.M. and Ahammad, M.F., 2016. Motives for cross-border mergers and acquisitions: perspective of UK firms. In Mergers and Acquisitions in Practice (pp. 30-57). Routledge.