Merger & Acquisition: Killer Game of Business

Before coming to the topic please don't get confused that M&A are same. Merger means when two companies are coming in one way to do business that is called Merger, where as Acquisition means when one company acquires another company.Merger & Acquisition is going to woo the market of Asia pacific and specially India. In the past two years India and other strong Asian countries has shown much interest towards M&A. Even there were recession in the world but these countries has shown dare to acquire companies from outside of origin and from different market. The more interesting fact is initially there was concept that developed countries was acquiring companies from developing countries. However marketer has changed this views and now it happened reversely. In the last few years Indian companies has acquired different multinational companies. Now I will talk about benefits of M&A these are followings-

1. More market coverage- The very first is companies are getting more coverage of market to spread the business.

2. Economies of scale- Second one is companies can get benefits of economies of scale in his operations.

And many more like Taxation, Vertical integration...............

Recent M&A-

1.Oracle acquired Sun microsystem in $7.4 billions

2.Craft acquired Cadbury in $19 billions

3.Disney acquired Marvel entertainment in $ 4 billions

4.Bharti Airtel acquired Zain

5.

Announced M&A-(most likely)

1. IBM is going to acquire SPSS

2. Nextel is going acquire Virgin mobile

The more interesting fact is when global M&A rate is decreasing by 38% where as India has shown positive growth rate of around 26%. The reason is In the past one year dollar declined by7.6% where as Rupees grown by 5.6%. In this context companies has benefits to acquire. If we talk about Indian companies they are very prudent when they goes for M&A but they have shown higher growth rate. One day when my friend Yogendra patel expert in finance was telling me story of M&A of TATA group and Corus. Which is biggest deal in Indian context. He told that instead of TATA If other company would have been acquired Corus. Definitely they would have became bankrupt. The reason was when TATA acquired Corus in $13.7 billions at that time company was in the 56th position in the world and after acquisition they became 5th in the world. What happened at that time TATA had not enough cash to acquire but any way they arranged and make it happen after all the trouble even they had to mortgaged his companies assets to bank. Unfortunely recession came and company had to suffer a lot. Even he me told that at that time TATA was the only company that bore this otherwise other companies can't think about this. By the way I should thank him to giving more insight towards M&A.

Still the game of M&A is on the way and going the woo the Indian market through M&A from different region. Here question arises is what kind challenges companies can face. The very first one is difference in culture but experts says Indian companies has guts to deal with these situations. The reason is Indian companies don't know culture of France but they know how to handle these because in Indian market they learned lot in context of cultural differences. There are more challenge which companies can face but they need to work on very carefully on his strategy and vision.