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The key driver of Business Enterprise Merger Synergies

Author: YuanMingZhen From: www.yourpaper.net Posted: 2010-06-01 23:23:15 Read:
[Keywords] M & synergistic effect of operating synergy weighted average cost of capital
[Abstract] from the following four aspects of a detailed analysis of the operation key reason of Enterprise Merger Synergies: (1) the source of operating synergies; (2) the realization of management synergy; (3) to assess the value of operating synergies; (4) rational thinking business synergies, and using a combination of qualitative and quantitative methods are described
Synergy is the key to the success of mergers and acquisitions, and as the benefits of operating synergies is particularly important, but also it can bring remarkable economic benefits to the enterprise.So the in-depth study of operating synergies is necessary.
, operating synergy sources of
The synergy effect refers to the merger between two enterprises through mergers and acquisitions to achieve enterprise resource sharing and complementary, the simple sum of the value of each operating independently when the business enterprise value is greater than the effect reached after the merger, including the management synergy, synergy synergy effect and financial management.Operating synergies mainly refers to the complementary operation, after making two or more than two companies merged into one company. Its overall economic benefits more than two independent arithmetic and enterprise benefit.The source can be considered from the following two aspects:
(a) operating synergies and horizontal merger
1 from the horizontal merger consideration, one of the main sources of operating synergies is economies of scale.When enterprises horizontal merger, the rapid expansion of the scale of the factory.This is the enterprise can adjust the plant assets, which achieves the best economic scale requirements.In order to minimize the cost of production to achieve synergistic effect; enterprise can also unchanged overall product structure, a single production of products, concentrated mass production in a factory. Bring to reduce product conversion unnecessary losses, so as to achieve the cooperative effect.Another level is the economies of scale of enterprises, through mergers and acquisitions is that many companies in the same business leadership, can save costs to achieve economies of scale and synergies.
2 from the horizontal merger consideration, economy of scope is also a non-negligible source.Economies of scope is refers to the use of some specific skills, or use it for the production of specific products or services of assets, to the production of related products and provide related services.To achieve the range to meet two conditions: the first is must exist inputs can be shared between different products; then is that once these inputs are used in the production of a product, they can be the production process of second kinds of products of free use, don't spend any cost.
(two) operating synergies and vertical merger
Operation synergy effect can also be obtained from the vertical merger.Vertical merger.Is to have contextual production process or the type of operation of the enterprise merger, is between the buyers and sellers of business continuity of production, sales in the M & A.Vertical merger can also achieve economies of scale and achieve the operating synergies, the same industry at different stages of the company can be combined to avoid contact related expenses and various forms of transaction cost.
Although in the market environment, if competitive supply do not meet, there is the possibility to avoid friction by contract.But some environmental factors and human factors will cause people to enforce the contract to pay a high price in the formulation, implementation and.He is also trying to determine the source of these frictions, it is these friction eventually led to the transaction is in the enterprise (through mergers) rather than in the market.In addition.It is very important by the enterprises merger can inputs supply. To reduce the uncertainties in the external environment of the enterprise, reduce the cost of risk.
Implementation of two, operating synergy effect
How to after mergers and acquisitions as soon as possible to achieve operating synergies is mergers and acquisitions completed initial urgent tasks to be completed.Generally speaking, enterprise planning period in the M & A is a how to achieve operating synergies plan.In order to achieve synergies to achieve business. Must affect the realization of factor analysis.The influence of many factors. Mainly manifests in two aspects: integrating strategy and early-stage after the enterprise merger and acquisition.Early-stage strategy includes many factors, the main evaluation of target enterprises, mergers and acquisitions, mergers and acquisitions in the process of communication.Integration after M & A including strategy integration, human resource integration.Cultural integration.The factors influencing the operating contract effect.The following will have corresponding strategies to analyze implementation. It mainly has the following several points:
The most appropriate choice of target enterprises 1
Select the target enterprise is the first step of enterprise merger and acquisition, but also is the most critical step. The target enterprise is directly related to the implementation of mergers and acquisitions business synergy.The first analysis of their management mode and characteristics should be the enterprise, and then to the goal enterprise management model and a detailed analysis, understanding of the merger of the two development potential, to see whether it can achieve the business = complementary, mutually reinforcing effect.As expected not to, should give up of M & A.
2 making the merger and acquisition scheme effective and reasonable means of merger
Almost all of the merger can bring savings opportunities, mergers and acquisitions have cost reduction effect also has been recognized by everyone, but in fact they should have when the merger occurred was included in the second level to consider the question, needs to be a priority.Is the Merger Synergies (including business contract effect) growth.And to promote the operating synergies, must first develop good M & a blueprint, whether planning is clear is a measure of the merging parties could right after the merger transaction, it can indicate that both sides can be in order, the integration of M & a later execution and description of such steps are handled correctly.Factors of merger means is to realize the management synergy effect can not be ignored.For example, such as the use of hostile takeover, the merger and acquisition cost is much higher than other acquisition cost.
The whole process of 3 mergers and acquisitions in the process of communication
The decision process of M & A in always give people a sense of uncertainty.This feeling is not only exist in between the staff, but also in suppliers, clients and even among shareholders.To the shareholders that M & a plan and target is very important and necessary, but only this is not enough.The enterprise must achieve the merger expectations to better, then after the merger the associated timely complete with a greater range of communication.Let them be able to understand the potential of M & A transactions from the merger and acquisition, thus to enable enterprises to gain more from the internal and external support.
The integration of the 4 M & a complete effective
M & A integration is various, be the first to bear the brunt of the conflict between cultural integration between enterprises regardless of the enterprise culture difference is seen in the deal before or after the deal.The most difficult to resolve the process of acquisition is different cultural differences in business problems.The different cultures blend together is the key to realize the management contract effect, and the key lies in the blend is good corporate culture analysis, positioning and integration plan.The integration and must do the following: first, formulate effective integration plan and respect each other's business behavior: secondly, treat each other's management; finally, making the transition policy and pay attention to the speed of integration and fusion.
To evaluate the value of
three, operating synergy effect
Operating synergies can bring considerable income, but how much is this return value? It is difficult to determine, but according to the weighted average cost of capital cash flow and enterprise can be roughly calculated the result.First of all, operating synergy is generally reduces the cost, to increase sales revenue.However, after the merger of incremental sales products at least a few years. There are also many mergers and acquisitions sales income reduce the examples, calculation so here we just after the merger cost reduction in this case to explain the value of business contract effect.
Operation synergy effect can make the value of M & A.How much should value is the value of management synergy.The following example to illustrate how to calculate, evaluate enterprise synergy value.Enterprise financial data assume that two independent as follows:

For the convenience of calculation, the above data is assumed, and the two enterprises are in a period of stability, growth rate of fixed and no income tax.Two separate evaluation value for enterprises:
Enterprise value =EBITI a (a growth rate of weighted average cost of capital) =20 / (10% a 5%) =400
The value of =EBIT enterprise B / (a growth rate of weighted average cost of capital) =30 / (10% a 5%) =6O0
If we do not consider the synergy after M & A is the value of 400 600=1000, considering the operating synergies (here in order to reduce cost.
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