A Study of Strategic Takeovers
1 Introduction 1
.1 Research Overview and Objectives Mergers & Acquisitions (M&A) and the construction industry have one thing in common. They both build new and unique entities. Due to their uniqueness the created entities differ in size, complexity and their character. Construction enti- ties are unique as e.g. an office can be 100 or 1000 feet high at varying foot- prints, design, material inputs or other parameters inducing different challenges on the architecture of the building. Some of the ways in which M&A are unique is the strategy that is required, the companies who bid, the culture the involved parties comprise and the location they encompass. Companies have several chal- lenges to address when considering M&A transactions: Is a horizontal acquisi- tion of competitors enhancing the market power and entailing synergies for the merging parties or are the employees reluctant to cooperate in the new entity causing extraordinary expenses instead of synergies? Can the vertical integration of suppliers raise the efficiency of the production process or is the consequent dependency on the integrated supplier detrimental? Does lateral diversification lead to substantial benefits, as revenue streams are distributed and the independ- ency from the core business is increased or causes this M&A type crucial diffi- culties due to the insufficient knowledge of the acquired business? Furthermore, the geographical focus of the M&A transaction significantly influences the ac- quisition decision. Should international diversification be preferred to national consolidation in the course of the globalizing world economy or is the familiar-...
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