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com/answers/finance-accounting/mergersacquisitions/FIN_MNA/559643-3173797 Geoff Searle Managing Director and Business Owner at PMI Consulting Limited

Inorganic Business Plans - Who benefits? Today, the business environment is rapidly changing with respect to competition, products, people, process of manufacture, markets, customers and technology is embedded in all these functions. It is not enough if companies keep pace with these changes but are expected to beat competitors and innovate in order to continuously maximize shareholder value. Inorganic growth strategies like mergers, acquisitions, takeovers and spin offs can be regarded as important engines that help companies to enter new markets, expand customer base, cut competition, consolidate and grow in size quickly, employ new technology with respect to products, people and processes. Research states that inorganic strategies are regarded by companies as accelerated strategies for growth and the unlocking of value to shareholders. My question is whether in your professional opinion you believe mergers and acquisitions actually yield?, who gains more out of the deal; the management or the investor? I am interested to receive your comments and individual prospective; in particular from people who have managed a successful inorganic business strategy with full business integration and measurement. Good Answers Peter Gruben Senior Operations Manager at Hewlett-Packard Financial Services I wish you had asked if customers, the company or the employees benefited from the change initiative because naturally this would lead to the answer of your question. I have managed these change activities for several companies and multiple functions on an international level and I think initially there is a cost period (legal frame work, as is definition, due diligence, training, centralization of people, processes and systems, consultants, travel, pay out, retainers and so on) usually followed by an extreme cost focused period (identification of cost cuttings, standardisation, automation, outsourcing, head count optimisation and so on). The art of profiting from tax and accounting management activities will surely influence the yield for the company. The factors that can destroy the best strategies are the lack of serious stake holder engagement (yes including customers) through clear communication, influencing, gaining commitment and managing long lasting results. Mergers and acquisitions yield if they are the right fit and if the implementation is managed correctly (which is

not always the case). In principal I believe the collaboration of joint forces is a promising yield opportunity. I would challenge if the opportunity was/is always maximised. At the end of the day these strategies are part of the environment we live in today. Companies that stop moving start going backwards. Senior managers make sure they always win that doesnt mean that investors profit. Amit Tandon Chartered Accountant, Promoter - GlobaliConnect CEO at Rohit & Amit Tandon Associates Geoff, For Investors: There's nothing wrong with buying a business in principle. Some of the perfectly acceptable purposes are to acquire new turnover (and probably new customers); to obtain new facilities, from factories to shops; to add new products; to purchase new technology; to enter new markets. All these laudable aims could be achieved by organic means .... acquisition is quicker and easier - provided you obey the rules. Any deal should be able to pass stringent tests and the financial benefits & an attractive return on investment might depend & vary in each case. When a company sells a business which proceeds to establish a far higher capital value in only a year or two, that must mean that the vendor management either under-managed the business, or sold it too cheaply, or most likely both. In this scenario, the investor/buying company will be the major beneficiary. A deal should mean: bigger is better; bigger resources and greater economies of scale ineluctably mean better results and still better resources. In this sense, investors should be the biggest beneficiaries. For Management: In many cases of M&A, the management span at the top becomes much wider, which imposes new strains. The managers' chances of coping successfully with their new burdens are reduced by the inevitable difficulties of accommodating two different cultures and pushing through downsizing measures which are bound to be resented by those affected - including those who stay behind. The upheavals of the early negative measures then exhaust the appetite for change, and needed positive action is postponed. The expert acquirer plans the onslaught on the deficiencies before the takeover. Concluding: However, mergers and acquisitions are only as good as the management of the people affected. This is the least understood aspect of a management activity which, despite its enormous costs, risks and responsibilities, has been oddly neglected. A deal well done should ideally be a win-win both for the investor & the management.

Ed Wawrzaszek Computer Expert in Forensics and problem solving Yes I do beleive mergers and acquisitions actually yield. Then again I beleive in Santa Claus and the tooth fairy I hear they're both having a rough year. Who gains the most is those who have the least to lose. Anything after your minimal investment and the value you put on your sweat equity becomes pure profit. isn't that what business and capitalism is all about? If investor A and investor B team up with investor C to compete with investor D whose sum is greater than investor A or investor B then the sum of the combinied equity in investor A, B and C is greater than the sum of investor D then the value of such investors may offer substantially more value than investor D can compete with. In the unlikely event that investor D wishes to divest himself/herself of its sum value to investor A,B and or C then the net sum of all the investors increases, not neccesarily exponentially. The value of all the sum may increase or decrease based upon the demand for such a value. Who is to gain the most? Those managing said investor A,B, C or D or the investor A,B,C D themselves. This would depend on what value management had stake in each individual investor. The question then remains do I own or do I lease. Can I walk away and cut my losses and simply stipulate that it was not my money to gamble with in the first place or am I more directly tied to my initial investment?