AFFECT OF MERGERS AND ACQUITIONS ON

ORGANISATION AS WELL AS MACROECONOMY

Group members:

Sr. Seat
Name Enrollment no.
no. no.
1 Muskan kamra 18BSPHH01C0740 68
2 Shashwat srivastav 18BSPHH01C0738 99
3 Vishal khandelwal 18BSPHH01C1541 96
4 Shivang deva 18BSPHH01C1199 92
5 sameeksha 18BSPHH01C1597 65

INTRODUCTION
Mergers and acquisitions are increasingly becoming strategic choice for
organizational growth and achievement of business goals including profit, empire
building, market dominance and long term survival. The ultimate goal of this
strategic choice of inorganic growth is, however, maximization of shareholder
value. The phenomenon of rising M&A activity is observed world over across
various continents, although, it has commenced much earlier in developed
countries (as early as 1895 in US and 1920s in Europe), and is relatively recent
in developing countries. In India, the real impetus for growth in M&A activity had
been the ushering of economic reforms introduced in the year 1991, following
the financial crisis and subsequent implementation of structural adjustment
programme under the aegis of International Monetary Fund (IMF). In recent
times, though the pace of M&As has increased significantly in India too and
varied forms of this inorganic growth strategy are visible across various
economic sectors.
The term mergers and acquisitions encompasses varied activities of stake
acquisition and control of assets of different firms. Besides, there are several
motives for different types of mergers and acquisitions seen in corporate world.
This chapter provides an understanding of the concept of mergers and
acquisitions from industry and regulatory point of view and motives for mergers
and acquisitions.
OBJECTIVES
To understand how mergers and acquisitions have affected the current organisation
economy.
SCOPE
PRIMARY DATA: We have collected the primary data from existing studies
in internet and books.
SECONDARY DATA: We will be making use of survey conducted as a part of our
research to understand the affect of mergers and acquisitions.

ANALYSIS:
In a merger transaction, a new company is formed by two companies. Post-merger,
these separately owned firms become a single entity and are jointly owned. During the
process of merger, the stocks of these companies are surrendered and the new
company’s stocks are issued. Generally, companies of similar sizes undergo the
process of merger.
In Merger, A + B = C.
Whereas in the case of an acquisition, one company is taken over by another company
and in the process, a single owner is established. Generally, a stronger and a bigger
company takes over a smaller and a less powerful one. The bigger company runs the
whole establishment with its identity and the smaller company has to lose its existence.
In contrast to the merger, shares of the acquired company are not surrendered at all.
These shares continue to be traded by the general public in the stock market.
In Acquisition, A + B = A

The synergy created by the merger of two companies is powerful enough to enhance
business performance, financial gains, and overall shareholders value in long-term. The
merger results in improving the purchasing power of the company which helps in
negotiating the bulk orders and leads to cost efficiency. The reduction in staff reduces
the salary costs and increases the margins of the company. The increase in production
volume causes the per unit production cost resulting in benefits from economies of
scale. The combined talent and resources of the new company help it gain and maintain
a competitive edge. The market reach is improved by the merger due to the
diversification or the combination of two businesses. This results in better sales
opportunities. With the merger, competition can reduce the industry and the new
company may have higher pricing power. A merger can result in job losses. An
acquiring company may shut down the under-performing segments of the company.
The increased size may lead to dis-economies of scale for the new company. It may not
have the control required for running a bigger company.
CONCLUSION
Conclusively, majority of the people that answered our questionnaire were
aged 18-28. Most of the respondents find mergers and acquisitions have accelerated
the current growth.
They also believe that it will improve the competitive position in the market after
completing the integration.
They even find that a long lasting trust between parties is one of the key factors for the
pre success of mergers and acquisitions, whereas they considered culture fit as the
post success factor.
They considered diversification as the most important factor behind mergers and
acquisition.
Mergers and acquisitions have helped the economy to capture a large market share
According to our study, Changes to business environment is the main reason behind
the failure.

BIBLIOGRAPHY
We have consulted book like “Business Research and Analytics” by Zikmund
and Anderson of Cengage publication. We have also taken information
from the internet sources like www.sisense.com, www.thegurdain.com and
www.economictimes.com .