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RESEARCH MERGERS AND ACQUISITIONS IN EMERGING ECONOMIES: A STUDY OF IMPACT ON SCALE ECONOMIES, TECHNOLOGICAL CHANGE AND STRUCTURAL SHIFT IN PROFITABILITY 52 Need the Dough July-October - 2007
MERGERS & ACQUISITIONS Introduction: Corporate entities are viewed as vehicles of value maximization for investors. Yet, they are also means of achieving diverse goals of different stakeholders. Viewed from this perspective, the objectives of mergers and acquisitions have been examined and studied as tools of achieving a number of different yet related objectives. Baumol (1967) and Mueller (1969) found merger and acquisition activity as a means of empire building. Shleifer and Vishny (1989) observed it to be a means of management entrenchment. Likewise mergers have been resorted to for enhancing monopoly power (Mueller, 1993); to improve the performance of an entity/target perceived to be underperforming (Roll, 1986). However, from the stand point of a world view that resources are limited and only the fittest can survive, the appropriate paradigm explaining merger and acquisition activity will be Efficiency Theory of Firms. The theory states that only efficient firms will survive and inefficient firms will be taken over (Manne, 1965; Mead, 1968; Jensen, 1988).The issue has assumed great significance in emerging economies in view of rising trend in them towards M & A. Theoretical and empirical research on motivations for mergers and acquisitions has identified a number of factors such as reduction in costs (Coase, 1937), elimination of hold up problems (Williamson, 1979), mitigation of uncertainties in market transactions (Klein, Crawford and Alchian, 1979), risk aversion (Blair and Kaserman, 1978) and meeting the challenges posed by price inflexibility (Carlton, 1979) and competition (Perry, 1989). These factors collectively constitute the effort to overcome internal management hurdles and to improve the efficiency. Studies on managerial performance have revealed that often poor performance is the consequence of managers deviating their focus from long term value maximization and profitability (Rappaport,2002 ). Deflection of the focus leads to decline in the operating efficiency leading to poor performance and non realization of the potential. Poor performance in the presence of good resources and potential attracts buyers/investors who believe that operating efficiency and value can be increased if methods and techniques of utilization of resources are improved. The acquiring firms are propelled to buy the target with the objective of transforming the operational landscape and practices to bring about improved efficiency, by Mr. Jangoo input-output Dalalratios and hence value. Another most Sr. VP-Enterprise, commonly cited Cisco managerial Systems (India & SAARC) motivation for undertaking M&A is unlocking synergies (Walter and Barney, 1990). Unlocking synergies means creation of economic gains when assets are used more effectively by the combined entity than by the target and acquirer separately (Shelton, 1988). This occurs pri- July-October - 2007 Need the Dough 53
Page 1: IIPM Planman Hyderabad Campus New D
Page 4 and 5: M A K E W E A L T H W H I L E O T H
Page 6 and 7: Editor’s Page Dear reader, Prasoo
Page 8 and 9: PANORAMA A“M&A”ZING INDIA 8
Page 10 and 11: PANORAMA The year gone by has seen
Page 12 and 13: PANORAMA MERGERS AND ACQUISITIONS :
Page 14 and 15: PANORAMA the Public Announcement, i
Page 16 and 17: PANORAMA DERIVATIVES A Critical Ass
Page 18 and 19: PANORAMA Competitive impact: This f
Page 20 and 21: GLOBAL PERSPECTIVE A BIG RICH INDIA
Page 22 and 23: PANORAMA a patriarchal system, whic
Page 24 and 25: TRENDS Jet Airways - Air Sahara mer
Page 26 and 27: TRENDS report stated that the gover
Page 28 and 29: TRENDS THE SURGING TSUNAMI - MERGER
Page 30 and 31: TRENDS established giants of the in
Page 32: TRENDS The FII funds inflow for the
Page 35 and 36: MERGERS & ACQUISITIONS The golden b
Page 37 and 38: MERGERS & ACQUISITIONS effect on th
Page 39 and 40: MERGERS & ACQUISITIONS Ltd, tractor
Page 41 and 42: MERGERS & ACQUISITIONS sector worth
Page 43 and 44: MERGERS & ACQUISITIONS Consolida
Page 45 and 46: P LANMAN TECHNOLOGIES KNOWLEDGE . I
Page 47 and 48: MERGERS & ACQUISITIONS Baffled Cons
Page 49 and 50: MERGERS & ACQUISITIONS or unlisted.
Page 51: MERGERS & ACQUISITIONS company, cou
Page 55 and 56: MERGERS & ACQUISITIONS ing, rather
Page 57 and 58: MERGERS & ACQUISITIONS capital and
Page 59 and 60: MERGERS & ACQUISITIONS The Value Of
Page 61 and 62: RESEARCH βQ = 0. (12) Finally, a C
Page 63 and 64: RESEARCH Tabel 3 Test of Structural
Page 65 and 66: MERGERS & ACQUISITIONS The Main Ide
Page 67 and 68: MERGERS & ACQUISITIONS D) Multinati
Page 69 and 70: I.T. = Business Growth At Planman T
Page 71 and 72: MERGERS & ACQUISITIONS An abundance
Page 73 and 74: MERGERS & ACQUISITIONS ber 2006, Qa
Page 75 and 76: MERGERS & ACQUISITIONS Kravis Rober
Page 77 and 78: MERGERS & ACQUISITIONS percent abov
Page 79 and 80: MERGERS & ACQUISITIONS The Current
Page 82 and 83: D A R E T O D R E A M : S T R A T E

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