Friday, 15 June 2012

Business Notes: The factors influencing the success of takeovers and mergers

Standard
  • Knowledge of the target and the industry
  • Good co-operation from employees
  • If the culture of both businesses fit well together/ have the same attitudes

Extensive analysis of the takeover and market target

  • Analyse and evaluate the company itself and the market
  • Scientific approach
  • Customer base/ target market – different to present
  • Financial situation/ performance
  • Workforce skills, experience, industry relations
  • Value of assets eg. property

Due diligence – the process of looking at a business in great detail

Employee involvement

  • Involve employees in negotiations
  • Keep them informed
  • Communication about job security

External Factors

  • Recession
  • Economic climate

Financial strength, position – burden of the cost of purchase

  • High gearing ratio
  • Can the loan repayments be made

Clearly defined motives

  • What are the objectives
  • Does it fit in with the strategy
  • Is it a strategic fit?

- Esjae x


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