Mergers & acquisitions: The buzzing global wave

Mar 27, 2015Enoch Antwi

The global wave of mergers and acquisitions seems to penetrate the corporate culture with an intense measure of hope and decisive takeovers.

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The global wave of Mergers & Acquisitions (M&A) seems to penetrate the corporate culture with an intense measure of hope. Business leaders today use mergers & acquisitions to overcome liquidating fears and solidify portfolios in emerging markets. However, the downturn of some mergers & acquisitions in recent times has also sparked caution to all stakeholders. This has affected many startups, entrepreneurs, corporate and consumers alike.

But, the pinnacle of success to most companies will inevitably require an acquisition or a merger to position themselves strongly in the market, as mergers and acquisitions grow steadily in most business operations today.

Just today, some of the world’s most powerful companies announced their willingness to some decisive mergers, while others showed their readiness to buy strategic companies in order to compete vigorously.

New trends in mergers & acquisitions

Amazon.com is in talks to buy the online luxury retailer Net-A-Porter. This could be the biggest acquisition for Amazon if it can influence discussions at the round table.

The US energy firm Chevron is also ready to sell its entire stake in Caltex Australia Ltd for about $3.58 billion. This will mean Chevron’s move out from the Australian refiner after almost 40 years as falling prices in oil and high operating costs hurt profit margins.

Goldman Sachs and KKR relinquished their remaining 13.9 stake in the German forklift truck builder KION, at $41 a share.

In Africa, Kenya’s Centum Investments sealed a deal with the majority owners of sisal hemp grower Rea Vipingo after prolonged takeover battle for the ownership of the agriculture company.

Whilst in South Korea, Hyundai Steel announced that all things being equal in deliberations, it will merge with its steelmaking affiliate Hyundai Hysco.

Palpable perks in mergers & acquisitions

These trends in mergers & acquisitions occurring quickly in recent times bring to question the effect of the movement.

Obviously, it is a smart move for companies that need investment capital to access funds or valuable assets through mergers or acquisitions. This way, they will get already made production or distribution facilities, much less the cost of building it anew.

In accessing a wide customer base, it has become so very important for advocate companies to increase market shares by utilizing their target companies' profitable systems for residual profits in their acquisitions.

Again, getting experienced staff and additional skills by merging or buying a firm gives a great competitive edge to buyers and sellers. This helps reduce cost and maximize profits.

Approach mergers and acquisitions with caution

There are indeed many other benefits of mergers and acquisitions. But The Business Frontal is of the view that while these trends seek to revolutionize industries, M&A’s should not be used to harm consumers. Neither should a takeover become insensitive to consumers and all stakeholders of a business.

“Companies should not have a singular view of profitability,” says Howard Schultz. "There needs to be a balance between commerce and social responsibility. The companies that are authentic about it will wind up as the companies that make more money," he added.

If these mergers & acquisitions could explore some wisdom from the playbook of social entrepreneurship, there will indeed be a balance between commerce and social responsibility. Any company which considers a merger or an acquisition must also consider the plight of workers and the society in which it operates.

Enoch Antwi

Enoch Antwi is the managing editor at The Business Frontal. He worked as a business and an environmental journalist in the late 1990s with the Business and Financial Times. His passion is to provide on-demand valuable information and insights on business, entrepreneurship, leadership, innovative technologies, and principles for corporate success in today's business world.