The Impacts of Business Risks on Mergers and Acquisitions
Shen, Rong (2007) The Impacts of Business Risks on Mergers and Acquisitions. [Dissertation (University of Nottingham only)] (Unpublished)
Mergers and acquisition (M&As) are one of the most important strategies of corporate expansion and growth, also known as an external capital investment. M&As are normally create value to shareholders and corporations. The high investment returns of M&As means the high business risks. However, the practical evidences indicate that roughly half merger movements fail, based on the shareholder maximization perspective. There are four major business risks may challenge the success of merger, which include market risk, strategic risk, financial risk and corporate culture risk. The previous studies focus on the influence of financial risk and corporate culture risk. In the financial risk, premium overpayment and method of payment are the two most significant factors. Culture conflicts may cause the communication problems cross the new combined companies, which eventually reduce the productive and efficiency of the performance. Those two risks may erode the shareholder value, resulting the failure of merger movement.
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