The motives underlying of merger and acquisitions Essay

The motives underlying of merger and acquisitions - Essay Example There are various factors that motivate mergers and acquisitions in different countries. There are also different outcomes of mergers and acquisitions as a result of the methodologies that are used to undertake the process. As such, this paper has been designed to analyse the major factors that motivate mergers and acquisitions drawing examples from institutions from the UK that have mergers and acquisitions. The paper will start by defining the meaning of the two key terms namely merger and acquisition in order to gain a full understanding of the whole concept. According to Jackson & Schuler (2000) a merger is a company that is formed after two companies have been joined or merged to form one entity and these companies have proportional ownership shares in a merger. On the other hand, in an acquisition, the other company takes full control of the other organization which is bought out through an acquisition. There are various factors that motivate companies to merge or to acquire other organizations. For instance, the need to increase market share, increase their geographic reach as well as responding to new deregulation as a result of globalisation are some of the forces that motivate mergers and acquisitions. Companies involved in mergers and acquisitions ought to reach a mutual agreement in order to obtain the envisaged benefits from the deal. The agreement between the two companies involved in a merger or acquisition has a bearing on the success or failure of the initiative. There are also quite a number of factors that motivate mergers and acquisitions in different nations. The realisation that markets are global as a result of globalisation has significantly contributed to an increase in the activities involving mergers and acquisitions especially of multinational companies (MNCs). According to a paper entitled ‘Factors that motivate mergers and acquisition’ (ND), deregulation of the global markets has significantly contributed to an increase in