« The price margins. Valuation methods. Valuation of Remedy Corporation. "Mergers and Acquisitions: Reasons and Consequences at the International Market" ...» Document abstract
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Language : english
finance
theses
date published
11/07/2006
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SummaryThe paper deals with the issue of mergers and acquisitions on the western market, viewing the topic from the standpoint of their failure and success. The subject is an extremely important one at present, as, on the one side, there is a trend towards major international mergers and acquisitions and, on the other side, many researches indicate that more than half of deals fail.
Having done the research on main factors of failure of Mergers and Acquisitions, it was established that companies fail transactions, because they forget about shareholders’ interests and are often driven by their own interests and motivations. While shareholders are interested in financial flows that can generate a particular transaction, managers often overpay for the target, by mistake and sometimes even intentionally, and thus transfer wealth to target’s company. Secondly, managers pay often in stock rather than in cash, communicating in such a way to shareholders about company’s insufficient liquidity. There have been determined some other less frequent factors of failure, but still affecting acquiring company’s shareholders.
The moral of the paper consists in that shareholders have an uncanny knock to react immediately to changes in corporate structure by pushing up or by pulling down the stock prices. Although there exist numerous motivations for mergers and acquisitions, companies must always set in advance the ultimate goal of value creation for their shareholders
Having done the research on main factors of failure of Mergers and Acquisitions, it was established that companies fail transactions, because they forget about shareholders’ interests and are often driven by their own interests and motivations. While shareholders are interested in financial flows that can generate a particular transaction, managers often overpay for the target, by mistake and sometimes even intentionally, and thus transfer wealth to target’s company. Secondly, managers pay often in stock rather than in cash, communicating in such a way to shareholders about company’s insufficient liquidity. There have been determined some other less frequent factors of failure, but still affecting acquiring company’s shareholders.
The moral of the paper consists in that shareholders have an uncanny knock to react immediately to changes in corporate structure by pushing up or by pulling down the stock prices. Although there exist numerous motivations for mergers and acquisitions, companies must always set in advance the ultimate goal of value creation for their shareholders
Table of Contents- Mergers and Acquisitions: The Overview
- Definition of M&A
- Classification of M&A
- Modes of payment for M&A
- Motivations behind M&A
- History of M&A
- Creation and Destruction of Value through Mergers and Acquisitions
- Definition of value creation
- Detailed analysis of M&A performance
- Distribution of value creation in M&A
- Factors of failure
- Valuation of Mergers and Acquisitions
- The price margins
- Valuation methods
- Valuation of Remedy Corporation
« financing tool, along with private equity and mergers and acquisitions, aimed at However, auctions have often failed and two reasons, emphasized in the ...» Document abstract
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16 word format
Language : english
finance
presentation
date published
23/11/2006
review : not yet assessed
level : Expert
requested 53 times
SummaryInitial Public Offerings (IPOs) have a very special place in contemporary economics and finance. They represent the entrance on a deep and liquid market with access to almost unlimited reserves of capital from all over the world. But IPOs appear also as a short-term fund-raising tool, especially used during the high tech bubble of the late 1990s from new, innovative and invincible-looking start-up companies from the Silicon Valley. In those years, investment bankers (who set up IPOs for the companies going public) thrived and were sacred “kings of capitalism” by The Economist. Since then, the euphoria vanished but IPOs continued at a respectable pace.
Between 1980 and 2001, the number of IPOs in the US exceeded one per business day. The distribution was not equal: in 1999 and 2000 alone, 900 companies went public. What is more, the IPO business has reached global importance, raising $167 billion around the world in 2005 with 1537 operations. During the period 1998-2004, North America represented 27% of the global market, Europe, Africa and the Middle East combined 42% and Asia-Pacific 31%. The trends of globalization are thus reflecting on the IPO business worldwide: dominance of the US market (on a country basis comparison) and rise of East Asia (especially China).
In a system dominated by market financing, flotation appears often to be a mandatory step in the life of a company above a certain size. We do not discuss in this paper IPOs under this perspective of structural necessity; rather we question the short-term stakes of going public. Besides the strategic choice to be listed on the stock market, what are the immediate objectives of an IPO? It has certainly become, especially since the internet bubble, a corporate financing tool, along with private equity and mergers and acquisitions, aimed at raising funds in a short period of time. Thus, we consider here IPOs under this aspect of short-term financing, even if it has obviously much broader implications.
We can define the objectives of an IPO for a company as follows: raise the maximum value possible through the flotation, and assure a stable and, if possible, increasing price in the aftermarket. The second objective depends partly on the first one, which is basically the direct result of the sale price. Setting the price of the stock to be traded publicly is the greatest challenge in the IPO process, as it determines the equity allocation among investors and the subsequent trading price on the market. Financial theories give no final answer as to what method is the best. Hence the perpetuation of the academic debate.
We have chosen to envision IPOs, the challenges they pose to efficient markets and the theoretical answers to those, through game theory. This approach allows us to detect where inefficiencies occur, what the different motivations of the actors involved are and what possible solutions have been proposed and tested. Game theory appears to us as the best tool to study market inefficiencies by offering a special opportunity to have a critical outlook on market mechanisms and the effects of strategic interaction upon them.
Therefore, we will first present the challenges which IPOs pose to efficient markets (section one). Then we will detail an alternative mechanism for setting the price in an IPO process – auctions: what are their advantages and drawbacks (section 2)? Finally, we will study the flotation of EDF, one of the greatest IPOs in the world in the last years, a rare example of overpricing and also a subject of polemics in France (section 3).
Between 1980 and 2001, the number of IPOs in the US exceeded one per business day. The distribution was not equal: in 1999 and 2000 alone, 900 companies went public. What is more, the IPO business has reached global importance, raising $167 billion around the world in 2005 with 1537 operations. During the period 1998-2004, North America represented 27% of the global market, Europe, Africa and the Middle East combined 42% and Asia-Pacific 31%. The trends of globalization are thus reflecting on the IPO business worldwide: dominance of the US market (on a country basis comparison) and rise of East Asia (especially China).
In a system dominated by market financing, flotation appears often to be a mandatory step in the life of a company above a certain size. We do not discuss in this paper IPOs under this perspective of structural necessity; rather we question the short-term stakes of going public. Besides the strategic choice to be listed on the stock market, what are the immediate objectives of an IPO? It has certainly become, especially since the internet bubble, a corporate financing tool, along with private equity and mergers and acquisitions, aimed at raising funds in a short period of time. Thus, we consider here IPOs under this aspect of short-term financing, even if it has obviously much broader implications.
We can define the objectives of an IPO for a company as follows: raise the maximum value possible through the flotation, and assure a stable and, if possible, increasing price in the aftermarket. The second objective depends partly on the first one, which is basically the direct result of the sale price. Setting the price of the stock to be traded publicly is the greatest challenge in the IPO process, as it determines the equity allocation among investors and the subsequent trading price on the market. Financial theories give no final answer as to what method is the best. Hence the perpetuation of the academic debate.
We have chosen to envision IPOs, the challenges they pose to efficient markets and the theoretical answers to those, through game theory. This approach allows us to detect where inefficiencies occur, what the different motivations of the actors involved are and what possible solutions have been proposed and tested. Game theory appears to us as the best tool to study market inefficiencies by offering a special opportunity to have a critical outlook on market mechanisms and the effects of strategic interaction upon them.
Therefore, we will first present the challenges which IPOs pose to efficient markets (section one). Then we will detail an alternative mechanism for setting the price in an IPO process – auctions: what are their advantages and drawbacks (section 2)? Finally, we will study the flotation of EDF, one of the greatest IPOs in the world in the last years, a rare example of overpricing and also a subject of polemics in France (section 3).
Table of Contents- IPOs and challenges to market efficiency
- IPOs and the Issue of Information
- Distortion mechanisms and waste of value through underpricing
- The key role of investment banks
- The auction model for setting the price: a viable alternative ?
- The main features of the auction model
- Game theory and auctions
- An illustration with Google’s IPO
- A case sStudy of EDF’s IPO
- Main characteristics of the state-initiated offer
- Winners and losers in EDF’s IPO
- Lessons from the IPO: the case for overpricing?
« to study the company Unilever for several reasons. had grown through repeated mergers of companies and activities, both trough innovations and by acquisitions. ...» Document abstract
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18 word format
Language : english
management
theses
date published
30/12/2005
review : not yet assessed
level : Expert
requested 3 times
SummaryWe have decided to study the company Unilever for several reasons. Firstly, Unilever is a European company that is one of the biggest multinational in the world. Secondly, as we have chosen to study the corporate culture of multinationals, Unilever presents a quite particular corporate culture. Indeed, as opposed to most of other multinationals, Unilever presents values based on human relationships and local autonomy. Finally, we had the opportunity to get an interview with a Unilever’s executive called Stéphane Verhaeren. He is Brand Manager for Knorr Culinary Aids.
Unilever is an Anglo-Dutch company which owns many of the world's consumer product brands in foods, beverages, cleaning agents and personal care products. Unilever employs more than 247,000 people and had a worldwide revenue of 48 760 million euro in 2004. Unilever has two parent companies: Unilever NV in Rotterdam, Netherlands, and Unilever PLC in London, United Kingdom. The current non-executive Chairman of Unilever N.V. and PLC is Antony Burgmans while Patrick Cescau is Group Chief Executive. Unilever's major competitors include Nestlé and Procter & Gamble.
Unilever is an Anglo-Dutch company which owns many of the world's consumer product brands in foods, beverages, cleaning agents and personal care products. Unilever employs more than 247,000 people and had a worldwide revenue of 48 760 million euro in 2004. Unilever has two parent companies: Unilever NV in Rotterdam, Netherlands, and Unilever PLC in London, United Kingdom. The current non-executive Chairman of Unilever N.V. and PLC is Antony Burgmans while Patrick Cescau is Group Chief Executive. Unilever's major competitors include Nestlé and Procter & Gamble.
Table of Contents- The history of Unilever
- Corporate culture theory
- Hofstede's cultural dimension
- Description of the management style
- Sociability and solidarity: Two Dimensions, Four Cultures
- Practical case: Unilever
- Description of Unilever's culture
- Harmonization of corporate culture in Unilever
Les internautes ont également acheté « FIGURE 19: | Market penetration over One of these reasons is the nonrivalrous nature of knowledge 1980, however, that the Cube made its international debut at ...» Document abstract
$9.95
260 word format
Language : english
economics
theses
date published
27/07/2006
review : not yet assessed
level : Expert
requested 33 times
SummaryFor several reasons, knowledge cannot be treated like any other commodity. One of these reasons is the nonrivalrous nature of knowledge, which means that one person’s use of certain knowledge does not diminish another person’s use of the same knowledge (at the same time). This important property of knowledge is used in several early models of R&D-based growth1,
e.g. Romer (1990), Grossman and Helpman (1991), and Aghion and Howitt (1992). In these models this property leads to a scale effect, which boils down to larger economies growing faster than smaller economies (with the measure of size suitably defined (cf. Backus, Kehoe and Kehoe 1992)).
In an influential paper, Jones (1995a) pointed out that growth with scale effects, as predicted
by the early models of R&D-based growth, is inconsistent with empirical facts. Over the last
40 years the OECD countries have experienced a tremendous rise in the number of people involved in R&D activities whereas the growth rates of per-capita income have shown no corresponding increase. This is a puzzling observation and has led to new models of R&D- based growth that did not incorporate scale effects e.g. Jones (1995b), Smulders and van de Klundert (1995), Young (1998), Li (2000), and Peretto and Smulders (2002).
Generally, however, these models suffer from the ‘Solow critique’; Solow (1994) criticizes
(some) growth theorists because they “… often just insert favorable assumptions in an unearned way; and then when they put in their thumb and pull out the vary plum they have inserted, there is a tendency to think that something has been proved.” (p. 53). In the models
of growth without scale effects the prediction of a scale effects in growth of the early models
of R&D-based growth is removed by limiting the extent of the spillovers associated with knowledge’s nonrivalrousness, but often the much-needed (micro-)economic foundation for
the crucial assumption in these models regarding the extent of knowledge spillovers - and the
mechanism limiting their extent - is lacking. Assuming that knowledge is rivalrous (not nonrivalrous) to limit spillovers and dispose of the scale effects prediction of the early models
of R&D-based growth simply does not shed much light on the issue of growth without scale effects however.
provide background information regarding, amongst others, work discussed in the main text, data used in figures, etc.
e.g. Romer (1990), Grossman and Helpman (1991), and Aghion and Howitt (1992). In these models this property leads to a scale effect, which boils down to larger economies growing faster than smaller economies (with the measure of size suitably defined (cf. Backus, Kehoe and Kehoe 1992)).
In an influential paper, Jones (1995a) pointed out that growth with scale effects, as predicted
by the early models of R&D-based growth, is inconsistent with empirical facts. Over the last
40 years the OECD countries have experienced a tremendous rise in the number of people involved in R&D activities whereas the growth rates of per-capita income have shown no corresponding increase. This is a puzzling observation and has led to new models of R&D- based growth that did not incorporate scale effects e.g. Jones (1995b), Smulders and van de Klundert (1995), Young (1998), Li (2000), and Peretto and Smulders (2002).
Generally, however, these models suffer from the ‘Solow critique’; Solow (1994) criticizes
(some) growth theorists because they “… often just insert favorable assumptions in an unearned way; and then when they put in their thumb and pull out the vary plum they have inserted, there is a tendency to think that something has been proved.” (p. 53). In the models
of growth without scale effects the prediction of a scale effects in growth of the early models
of R&D-based growth is removed by limiting the extent of the spillovers associated with knowledge’s nonrivalrousness, but often the much-needed (micro-)economic foundation for
the crucial assumption in these models regarding the extent of knowledge spillovers - and the
mechanism limiting their extent - is lacking. Assuming that knowledge is rivalrous (not nonrivalrous) to limit spillovers and dispose of the scale effects prediction of the early models
of R&D-based growth simply does not shed much light on the issue of growth without scale effects however.
provide background information regarding, amongst others, work discussed in the main text, data used in figures, etc.
Table of Contents- Grouth and scale effects
- Knowledge, R&D and spilovers, at the firm
- Grouth without scale effects and structural
- Measurement issues in the study of R&D-based
- The product life cycle, demand
1
knowledge network
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