Proceedings of the 3rd European Conference on Intellectual Capital

Sorin Anagnoste and Gabriela Dumitru
revealed that <strong>the</strong> most critical factors in today’s merger process are providing leadership and
direction, and putting <strong>the</strong> new organization and management in place (please see figure below)
Figure 4: Success factors for a M&A transaction, study results
Source: Ro<strong>the</strong>nbucher, J. and Declerq, S. (2008) Three years after <strong>the</strong> marriage, AT Kearney
In <strong>the</strong> entire process <strong>the</strong> complexity <strong>of</strong> activities and efforts needed to be invested vary along <strong>the</strong>
timeline <strong>of</strong> <strong>the</strong> M&A process. A recent article wrote in 2010 by <strong>the</strong> DePaul University and Arizona
state university, “The cost <strong>of</strong> advice in merger & acquisition transactions”, shows that mergers &
acquisitions are significant resource-consuming activities for businesses. The underlying idea is that
real spending commitments (e.g. cost <strong>of</strong> merging advisory) are done by a potential acquirer even
before any announcement <strong>of</strong> proposed transaction and most <strong>of</strong> <strong>the</strong> times <strong>the</strong>se costs if <strong>the</strong>
transaction does not succeed will never be recuperated. The costs size is directly correlated with <strong>the</strong>
complexity <strong>of</strong> <strong>the</strong> deal and <strong>the</strong> financial size <strong>of</strong> <strong>the</strong> deal.
The conclusion and hypo<strong>the</strong>sis <strong>of</strong> <strong>the</strong> article would be that it is this cost <strong>of</strong> pre-merger advice that
explains a large share <strong>of</strong> <strong>the</strong> decline in acquiring-firm shareholder wealth that is frequently observed
in such transactions (Cole, Ferris and Melnik, 2010). In <strong>the</strong> context <strong>of</strong> our study, <strong>the</strong> conclusion is
valid as it reveals increased effort and due-diligence from <strong>the</strong> acquirer side not to fall into this trap,
fact evidenced by <strong>the</strong> successful increase in shareholder value after <strong>the</strong> M&A process took place.
3. Mergers and acquisitions in emerging markets
In order to maintain <strong>the</strong>ir position on <strong>the</strong> market, companies need <strong>the</strong> appropriate levers and <strong>the</strong>
increase in <strong>the</strong> number <strong>of</strong> M&A transactions is adding pressure on <strong>the</strong> companies in developing
world.
Acquirers in developed countries usually pursue a merger to cut costs and create growth
opportunities. The aim is to establish or broaden <strong>the</strong>ir presence in high-growth markets, so <strong>the</strong>y are
constantly on <strong>the</strong> lookout for acquisitions with growth prospects. These companies also focus on lowcost
environments for manufacturing and sourcing. Well aware <strong>of</strong> <strong>the</strong> growing threat from emerging
rivals, <strong>the</strong>y want to streng<strong>the</strong>n <strong>the</strong>ir competitive positions.
In contrast acquirers from developing countries focus on gaining access to production and new
technology. These firms are also entering established markets to maximize <strong>the</strong> advantages <strong>of</strong> <strong>the</strong>ir
low-cost structure against traditional competitors. This strategy pushes expansion plans by
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