38
Current
p
roduct s/
new markets
St rat egic reali gnm ent
Technologica l change
Regulatory
and
polit ical chan ge
A
cquire capabil it ies
t
o
adap t more rap idly
t
o
environmental
changes t han could be
achiev ed if developed
int ernally
Hubris
(mana geri al
pride)
Buying undervalu ed
asset s (q ratio)
A
cquirers
beli eve their valuation of t arget
more accurat e t han t he market’s, causin g
t
hem t o overp ay
by
overest imat ing
sy nergy
A
cquire asset s more cheaply
when
t
he
equit y of exist ng co mp anies
ing co mp anies
is less
t
han
t
he cost
of buying or buildin g t he asset s
M smanagem ent
ismanagem ent
(agency
p
roblems)
Replace man a gers not act ng
ing
in t he best
int erests
of t he owners
M
anageria lism
Increase
t
he size of a company
t
o
increase
t
he p ower and p ay of managers
Tax consider at ons
ions
O
btain unused net op erat ng losses
ing losses
and
t
ax credit s, asset
writ e–ups,
and substit ute
capit al ga ins
for ordinary
income
M
arket p ower
Increase
market
share t o imp rove abilit y
t
o
set prices
above comp etit ive levels
M svaluat ion
isvaluat ion
Invest or overvaluat ion of acquir er’s
st ock
encourages
M
&A s
Saar , Riikka
i, Riikka
(2007)
st at ed
in a
universit y research
t
hat
t
here are 17 motives of comp any
merger:
1.
To create a
numb er
of
new
business opp ortunities and
ent ry
new
markets
instit ut ional
ow ners
supp ort sp ecially this
manager ial
go al
of grow t h; Acquirers
of
healt hy
comp anies
hold
t
o growt h
motives more
oft en than
t
hose who
acqu ired
unhealt hy companies.
2.
To reduce earnings
vol at ility .
3.
Technical
effic iency
and economies
of scale.
4. Paralle l
i.e.
conta gious
M
&A s,
t
here
is a
kind of economical
“force
major”
t
o
st ay compet itive for customers while
t
hey
are
mer gin g.
In t he
60s and early
70s t here w s a surge of the
as a surge of the
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