Provisional Title of Dissertation
Motives and Effects of Mergers and Acquisitions
Describe the topic(s) or issue(s) you wish to investigate for your Dissertation.
These must relate to the subjects that comprise your programme of study, and must clearly indicate what your aims /objectives / research questions will be.
Mergers and acquisitions have been part and parcel of business strategies for a long time. There is a common belief that mergers and acquisition are motivated by the need to increase shareholder value through an increase in organisational efficiency, market control, economies of scale among other aspects. Despite that popular notion, mergers and acquisitions do not often lead to expected outcomes (Straub 2007). Thus, it remains unclear whether mergers and acquisitions are ideal for organisations or not. Moreover, since motives of mergers and acquisition differ, conducting a study to develop further understanding of both the motives and effects of acquisitions is desirable. For those reasons, the focus shifts to the aim of the study.
The main research question considered in the proposed study is: what are the motives and effects of mergers and acquisitions? Towards answering the question, the proposed study will also address the following specific questions.
- Do mergers and acquisitions lead to an increase in shareholder value?
- What are the differences in the motives and effects of mergers and acquisitions in different organizations?
- Do mergers and acquisitions lead to an increase in market size?
Preliminary Literature Review
The proposed study is expected to focus on the services sector. To get insight into the effects and motives of mergers and acquisitions, data from Yahoo Finance and other reliable up-to-date data will be analyzed. The data is chosen owing to its availability, in addition to its relevance in the computation of useful ratios such as efficiency ratio (EFF), rate of return on investments (ROA) and return on equity (ROE).
Whereas an acquisition is an act reflective of an organization taking control of another, and establishing itself as the owner, a merger takes place when entities of equivalent stature agree to dissolve and become one (Reifenberger 2012). Hence, a merger has two or more companies doing away with distinct/separate operations. Since there are many variations between mergers and acquisitions, their motives and effects are also expected to vary.
Business events spanning over the previous thirty years are thought to have influenced the emergence of mergers and acquisitions as business strategies as observed by Cartwright & Schoenberg (2006). It is believed that the United States is home to the initial cases of mergers and acquisitions. From the first reported case of mergers and acquisitions, the primary motif was to gain larger market share or total market control (Cartwright & Schoenberg 2006).
Ferris and Petitt (2013) have identified six phases involving mergers and acquisitions. Based on the authors’ analysis, the beginning and end of mergers and acquisitions often coincided with economic changes such as economic recessions or cycles. Ferris and Petitt (2013) held that credit availability, technological changes, regulatory changes and industrial shocks were major contributing factors to mergers and acquisitions.
In the first wave of mergers and acquisitions, companies were interested in forming monopolies (Harwood 2006). For example in 1901, entities operating in the United States steel industry merged to form the United States Steel Corporation. However, the government enacted legislation that outlawed anti-competitive behaviour. Thus, it is hypothesized that companies were seeking market control.
What facts or information will you need to gather? How will you access these?
- Current reflection on mergers and acquisitions based on the services sector will form the basis of the study. In particular, recent journal articles and books that contain relevant studies are likely to be significant sources of information.
- I intend to employ both descriptive survey and correlation designs. Through a descriptive design, data collected can be analyzed in descriptive terms. Regarding the use of correlations, the method is significant since it allows a researcher to assess the level of association between or among variables. The efficiency ratio (EFF), rate of return on investments (ROA) and return on equity (ROE) ratios will also be computed to determine the effect of mergers and acquisitions. The first method involves collecting secondary data from online sources such as Yahoo Finance. The data from such sources would be useful in determining the effects of mergers and acquisitions.
- The study’s analysis is likely to be overly statistical.
To which subject area(s) is this proposal - in your view -most strongly related?
In my assessment, mergers and acquisitions centre on the strategic aspect of organizations as well as marketing. In addition, the aspect of personality is evident since managers may consider expanding personal aggrandisement. For that reason, I presume that the proposal leans more towards strategic management, organizational structures and marketing.
Name any tutor(s) you think might be appropriate to supervise your dissertation.
It should be noted that the proposed research concentrates on motives and effects of mergers and acquisitions. Thus, the purpose of the study entails carrying out an examination of the benefits that mergers and acquisitions have on companies. The focus is on some time before and after mergers and acquisitions are completed. Through the analysis of selected companies’ financial records, I intend to develop a better understanding on how markets react to mergers and acquisitions. Such changes may include an increase or decline in shareholder value, as reflected in equity value and such aspects as increase/decline in sales, or overall effect on the efficiency of organisations. It is expected that through a study of this nature, students of business get insightful information on both motives and effects of mergers and acquisitions.
- Cartwright, S and Schoenberg, R 2006, "Thirty years of mergers and acquisitions research:
- recent advances and future opportunities", British Journal of Management, vol. 17, no. 1, pp. 1–5
- Harwood, IA 2006, "Confidentiality Constraints within Mergers and Acquisitions: Gaining
- Insights through a 'Bubble' Metaphor". British Journal of Management, vol. 17, no. 4, pp. 347–359.
- Ferris, K and Petitt, B 2013, Valuation for mergers and acquistions: an overview. Pearson
- Education, FT Press, Lake Street, Upper Saddle River, New Jersey.
- Reifenberger, S 2012, M&A Market: The New Normal, CFO Insight.
- Straub, T 2007, Reasons for frequent failure in Mergers and Acquisitions: A comprehensive
- Analysis, Deutscher Universitäts-Verlag (DUV), Wiesbaden.