Mergers and Acquisitions: A Guide to Creating Value for Stake Holders

241 Pages·2001·13.33 MB·English

by  Michael A. Hitt

Mergers and Acquisitions
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Mergers and Acquisitions
A Guide to Creating Value for Stakeholders
Michael A. Hitt
Jeffrey S. Harrison
R. Duane Ireland
OXPORD
UNIVERSITY PRESS
2001
OXPORD
UNIVERSITY PRESS
Oxford New York
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and associated companies in
Berlin Ibadan
Copyright © 2001 by Oxford University Press, Inc.
Published by Oxford University Press, Inc.
198 Madison Avenue, New York, New York 10016
Oxford is a registered trademark of Oxford University Press
All rights reserved. No part of this publication may be reproduced,
stored in a retrieval system, or transmitted, in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise,
without the prior permission of Oxford University Press.
Library of Congress Cataloging-in-Publication Data
is available
ISBN 0-19-511285-7
135798642
Printed in the United States of America
on acid-free paper
To Frankie. I love you. We share everything.
MAH
To my angel, Marie.
JSH
To my wife, Mary Ann, and our children, Rebecca and Scott.
I love each of you deeply. Thank you for being therefor me the time
or two that I have fallen behind. I'll always be there for you, too.
RDI
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Contents
Preface ix
1. The World of Mergers and Acquisitions 3
2. Exercising Due Diligence 17
3. Financing an Acquisition 31
4. Looking for Complementary Resources 47
5. Seeking a Friendly and Cooperative Merger 65
6. Achieving Integration and Synergy 81
7. Learning from Experience 103
8. Avoiding the Hazards of Diversification 115
9. Deciding If Innovation Can Be 129
Acquired Successfully
10. Acquiring or Merging Across Borders 143
11. Taking an Ethical Approach to Mergers 161
and Acquisitions
12. Beating the Odds in the M&A Game 177
Notes 189
Index 219
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Preface
The number and size of mergers and acquisitions being completed
continue to grow exponentially. Once a phenomenon seen primarily
in the United States, mergers and acquisitions are now taking place in
countries throughout the world. It is clear that acquisitions have
become one of the most important corporate-level strategies in the
new millennium.
Because of the importance of acquisition strategies to firm growth
and success in the twenty-first century, we have written this book as a
guide to help managers navigate a successful merger or acquisition. We
explain the actions and processes of executing effective mergers and
acquisitions. We also describe some of the major problems confronting
managers who are planning such strategic actions.
Our book is grounded in research on many firms in a number of
industries and we describe multiple examples of successful and less
successful mergers and acquisitions. Although their number and size
are increasing, many mergers and acquisitions fail—or at least do not
reach their potential. Furthermore, some of these failures have been
highly publicized. To explain these less-than-intended outcomes, and,
more important, to describe actions that lead to merger and acquisition
success, we were motivated to write this book. We have conducted
research on mergers and acquisitions for the last 15 years. While the
basis for our book is grounded in this research, the book goes beyond
our prior research. Our goal was to write a complete guide for execut-
ing successful mergers and acquisitions. We explain how to conduct an
acquisition and also how to avoid major potential pitfalls. The book
describes the due diligence process and how acquisitions are financed.
We explore how firms find partners/targets for acquisitions that have
complementary resources, an important characteristic for acquisition
success. The process of seeking and finding cooperative mergers and
achieving integration and synergy are explored in two separate chap-
IX