Effect of Mergers and Acquisition on Target Companies

7/31/2019 Effect of Mergers and Acquisition on Target Companies

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NAME XXXXX XXXXXDEGREE BA (Hons) Accounting & Finance

TUTOR Andrew CoulsonTITLE the Effect of Mergers and Acquisition on Target CompaniesDATE March 2011CAMPUSE Newcastle

STUDENT No: 10028853Project submitted in partial fulfilmentOf the requirements of theBA (Hon) ACCOUNTING & FINANCEof Northumbria University


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DECLARATIONS

I declare the following:-

That the material contained in this Project is the end result of my own work

and that due acknowledgement has been given in the bibliography and

references to ALL sources be they printed, electronic or personal.

(1) The Word Count of this Project is: Section A: ___3621______

Section B: ____5215_____ Total Word Count: ___8836______

(2) That unless this Project has been confirmed as confidential, I agree to

an entire electronic copy or sections of the Project to being placed on

Blackboard, if deemed appropriate, to allow future students the

opportunity to see examples of past Projects. I understand that if

displayed on Blackboard it would be made available for no longer than

five years and that students would be able to print off copies or

download. The authorship would remain anonymous.

(3) I agree to my Project being submitted to a plagiarism detection service,

where it will be stored in a database and compared against work

submitted from this or any other School or from institutions using the

service.

In the event of the service detecting a high degree of similarity between

content within the service this will be reported back to my supervisor and

second maker, who may decide to undertake further investigation which

may ultimately lead to disciplinary actions, should instances of plagiarism


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be detected.

(4) I have read the University Policy Statement on Ethics in Research and

Consultancy and the Policy for Informed Consent in Research andConsultancy and I declare that ethical issues have been considered and

taken into account in this research.

SIGNED: ________________

DATE: __________________


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Abstract

This professional project is intended to link personal development and

professional career with four different psychometric questionnaires

supported to understand and improve myself effectively. Self analysis help

people find most suitable method to learning and working. Furthermore, the

achievement of academic and professional career is based on the self

awareness and development. After analyzing my personalities, an

academic piece of work about mergers and acquisition activities will beconducted to relate my personalities to future career and social demand.

The boom of mergers and acquisitions activities has become the hot issue

for the economy field, my academic work will analyze the activity sufficiently

and deeply.

Key words: self-development, career, mergers and acquisitions


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ACKNOWLEDGEMENTS

First of all, I would like to thank my parents. I cannot have the opportunity to

study further in the UK without their support.

Secondly, I really appreciate the suggestion and guidance received from

the Professional Project Tutor Andrew Coulson in the processing of my

dissertation.

Thirdly, I would like to thank all the lecturers and tutors in the Newcastle

business School of Northumbria University help me to learn the business

knowledge.

Finally, I would like to thank my best friend Yan, who makes every efforts to

help me whatever in my studying and my life.


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Table Contents

DECLARATIONS ......................................................................................................... IIAbstract ................................................................................................................... IVACKNOWLEDGEMENTS ............................................................................................ VTable Contents ........................................................................................................ VISection A .................................................................................................................. 1

Introduction ...................................................................................................... 11. Personal Learning Analysis ............................................................................ 2

2.1 VARK questionnaire .............................................................................. 22.2 Myers Briggs Test Results ..................................................................... 52.3 Honey and Mumford Learning Style Questionnaire ............................ 72.4 Belbin Inventory Test Results ............................................................... 8

3. Personal Career Development ...................................................................... 93.1 Lifelong Learning .................................................................................. 93.2 Transferable skills ............................................................................... 113.3 Career Choice ..................................................................................... 14

Section B ................................................................................................................ 15Part 1 introduction .......................................................................................... 15

1.1 Motives for the topic choice .............................................................. 151.2 overall objectives ............................................................................... 161.3 part outline ........................................................................................ 17

Part 2: Literature Review ................................................................................. 192.1 PEST Model of environment analysis of mergers and acquisitions ... 192.2 Merger Motives .................................................................................. 242.4 Post-acquisition effect on target companies ..................................... 34

3. Summary and Conclusions .......................................................................... 36Reference ........................................................................................................ 39

AppendicesReflective Statement


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Section A

Introduction

It is more acceptable that self analysis is the basic step of success for a

person in this modern society. The aim of self analysis is to find accurate

position in the society and to acquire correct outline of value. A successful

person is good at finding the merit of his own and taking advantage of it to

make the achievement. Establishing a clear target and implementing

sufficiently is important to everyones whole life. A Chinese famous

ideologist Lao Tzu argued that knowing yourself is enlightenment rather

than knowing others (2000). Only if knowing yourself all around can

develop yourself effectively. During the self analysis, the first step is that

you should understand the three questions: what kind of people y; what is

your long-life objective; what career is proper to you? After considering the

questions carefully, you will have clearer conception of your anticipant life.

Next step is more important, analyzing your strengths and weakness.

According to the history of successful person, they concentrate on learning

strongpoint from others to improve themselves constantly. You have to

exert your advantage and avoid the weakness as much as possible in the

career. After that, you should make every effort to seize the opportunities atall times and places. Finally, continuous self development is based on the

former steps. Only if knowing yourself sufficiently you can improve yourself

to achieve the objective persistently.

This project of self analysis will be divided two parts. The first part is

personal learning analysis. Four self analysis toolkits, which are VARK,

Myers Briggs, Honey and Mumford learning style questionnaire and Belbin


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Inventory, will help me to analysis myself more effectively. These test

results show my personalities, characteristics, strength and weakness; the

suggestion of the learning style and work I may be suitable. I will providemy memorable experience combining with the test results to improve

myself in learning and working. The second part is about my career choice.

I will discuss my major in the university and skills learning from my studying.

Then I will integrate the career choice with my personalities to make my

lifelong objective.

1. Personal Learning Analysis

2.1 VARK questionnaire

The first test I took was the VARK questionnaire, of which result highlight

your learning preference standing for visual, aural, read/write, kinesthetic

and multimodal. The test assess users own learning style and give them

helpful learning strategies what might mean for users educational and

career life. After completing the VARK questionnaire, users can easily know

about their preference study strategies and the results will give some

suggestion of knowledge intake and output. The VARK study preference is

important for users to find a more intelligent learning style to solve some

tasks easier. (Yousef, Alkhasawneh, Mrayyan, Alashram and Docherty,

2007)

Figure 2.1: VARK Questionnaire Results

Visual Aural Read/Write Kinesthetic

3 6 6 2

Source: www.vark-learn.com/english/result.asp


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My questionnaire results (figure 2.1) indicated that I have two strong

learning preferences, which are aural and read/write learning preference. In

terms of aural learners, who always focus on what teachers say in thelectures. Furthermore, this kind of learners easily absorbs information

through explaining new ideas to others, talking with friends, listening tapes,

discussing tasks with their teachers, attending lectures and using jokes and

stories. (Fleming, 2004) I would definitely agree with the results, having

always learnt most effectively in discussing topics with my friends. I can

easily seize the key points through listening to lectures or others opinions.

After class, I can apply the theory learnt from lectures into practice at once.

My friends al ways call me a quick learner. Moreover, I am confident and

pleased to delivering my ideas or explain some topics to the public. For

example, before examination, a lot of classmates always require me to

explain the chapter-end exercises. At that moment, I am very pleasure

teach these classmates who are still puzzle with the knowledge in certain

module. There are three reasons for me to do so. First of all, giving help to

others is my happiness resource. Secondly, I can build the close

relationship with my classmates. Thomas (2009) argues that we had better

connect to some important people, who will become a kind of treasure in

the future. The last and the most important reason is when I explaining

exercises to my classmates I review the knowledge efficiently. This

experience sufficiently support that I possess an aural learning preference.

In my opinion, my preference for aural learning style is linked to my family

environment. My parents are liberal to adopt my advices to my life, they

hard be strict to ask me do whatever I do not like to do. Therefore, I was

encouraged to speak my mind and have talk with my parents. I always get

important suggestion from my parents rich experience.


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My same strong learning preference is read/write. This kind of learner

prefers essays, reports, lists, definition, manuals, readings and taking notes.

(Thomas, 2007) I agree with the test result. I am easily attractive bycharacters. For example, I find that I will concentrate to the subtitles rather

than the pictures involuntarily when seeing a movie, which means I am

sensitive to the words. I prefer to read the teaching materials then write up

my notes after every lecture. This method being adopted from my junior

high school is benefit for me to review the knowledge learnt from the

lectures. Moreover, writing essays is a good way for me to study. When

writing an essay, collecting information cannot be avoided. Through reading

more professional books, journal articles and skimming web pages, the

knowledge is left a deep impression in my mind.

My preference for write/read learning style is influenced by the education of

my primary school. Teachers have stringent requirement for pupils to write

and read article. The punish way of our teacher is to write some paragraph

at least five times. This education drives me to become a read/write learner.

Aural and write/read learning preferences help me both in studying in the

school and my future career. Undoubtedly, my most parts of finance career

are reading finance reports, building Microsoft Excel models and analyzing

complex market prices. It is obvious that write/read learning skill becomemy competitive advantage comparing to other co-workers. However, aural

skill helps me to learn new concept of experienced colleagues. Moreover, I

can catch the key point of information when having meeting with manager.

Then I can take action improve my work effectively. Otherwise, developing

my visual and kinaesthetic skills cannot be ignored. Improving abilities all

around will benefit to my future.


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Therefore, I strong believe that VARK questionnaire results reflect my

preference learning skill. I should take advantage of my strong learning

preference to improve my study and future career. Meanwhile, developingthe weakness skills is also important for me.

2.2 Myers Briggs Test Results

The second test I took was Myers Briggs, which is a personality analysis

model being based on four preferences: Extraversion or Introversion;Sensing or iNtuition; Thinking or Feeling; Judgment or Perception. After

completing MBTI (Myers Briggs Type Indicator) users will have clear

version of career choice, people influence and leadership skill development.

My highest scoring type is ENFJ. The first letter E is defined that I prefer to

direct my energy to deal with outer environment such as people, things and

situations. Therefore, my preference is for Extraversion. The second letter

N highlight that I prefer to deal with unknown or unobvious ideas to create

new possibilities when processing information. This personality I possess

called intuition. The third letter F indicates that I prefer to decide using my

beliefs rather than objective logic. Then my preference in making decisions

is for Feeling. The last letter J demonstrates that I prefer my life to be

planned, stabled and organised then my preference is for Judging. (Myers

and Myers, 1995)

According to the ENFJ description (Appendix A), what I am really concern is

to build harmony personal relationship. Whenever making decisions or

expressing my opinions, I usually consider other peoples feeling first.

Hogan (2006) argues it is important for people to build and maintain the

relationship with different people; even they differ from gender, age or


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ethnicity. I would agree with the results. I cannot be isolated from others in

my daily life, because the harmony relationship with families, friends,

colleagues and classmates bring me not only happiness but benefits:instrumental suggestion and emotional support. (Connie, Jean and Jane,

2000) In terms of the instrumental suggestion, families, friends, classmates

and so on will help me to solve some tough problems and give effective

suggestion when I faced with challenges. Moreover, they always share

important information without reservation, sometimes this information might

become an opportunity for me. The example happened last year. A friend of

mine worked in an international company recommend me to have an

interview of his companys intern. Thanks to his recommendation I get the

intern position in the sales department of that international company. During

my internship, I learnt about more practice experience from my daily work

and suggestion from co-workers. This is high return from the harmony

relationship. Besides that, harmony relationship brings me emotional

support. When we finish close relationship with our better half or lose a

family member, we want to talk with friends and families to release our

bitterness. They will give us emotional support. If we do not have many

people around us and we are feeling lonely. Nobody can be found to rely on

for emotional support. Furthermore, my personality of seeking harmony

relationship makes me to be a participative style leader, who achieve

through co-workers. I adopt ideas from team members and let them feelvalued as an integral part of the team. I will make decision from

communicating with co-workers rather than authoritarian. (Daniel, 2000)


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2.3 Honey and Mumford Learning Style Questionnaire

The third test I took is Honey and Mumford learning style questionnaire,which is designed to find out peoples preferred learning styles and to make

them to learn more efficiently. My test result is strong preference for activist.

Activists are enthusiastic about any new experience. They tend to thrive on

the challenge of new experience but feel bored with implementation and

complex process. Learners who have a preference for the activities style

will learn best from new challenges, competitive teamwork and ideas

generation. (Honey and Mumford, 1986) I would agree with the result that I

am full of curiosity to anything new but lose passion gradually in

implementing process afterward. An example in my real study supports the

result of Honey and Mumford learning style questionnaire sufficiently. When

I learnt the topic of Credit Crunch in the international finance module, I felt a

little bit boring of this issue discussed again and again last several years.

However, our lecturer used a totally different method to explain the root of

Credit Crunch. He drew a bottle of champagne on the blackboard referring

to the mortgage; pyramid class representing the different level risky

securities. I was attractive by the new visual explanation of Credit Crunch

and felt more interested in this topic. According to the result of

questionnaire, I also find some weakness that easy to lose my

concentration after initial passion on the project, which might make troubleto people surrounding me. I should mend the weakness to improve myself

in the future.


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2.4 Belbin Inventory Test Results

The last test I applied was Belbin Inventory, of which results show theself-perception team role. According to the results (Appendix A), my

preferred roles is resource investigator. This kind of people is enthusiastic

to pursue contacts and explore opportunities, who will give the whole team

a rush of enthusiasm at the start of the project. Due to the personality of

extroverts and communicative, they are quite appropriate to focus on

outside work. However, the weakness will appear towards the end of a

project, they will lose momentum and forget small details. (Belbin, 2003)

I totally agree with the test results. When participated group work in the

seminar, I was a team leader in charge of the tasks distribution. At first, I

was activity to email team members to have discussion of our presentation

and provided new ideas to help our group broaden the version and found

more angles to analyze the tasks. I prefer to discuss my own ideas to the

group members in the meeting of group working rather than implement the

task in practice. Due to my good relationship with others, mentioned at

previous test (Myers Briggs), I can easily collect useful information from

classmates, which is especially useful at the development bottleneck within

our team. Communicating, contacting and negotiating with others are my

strength, which help me build relationship and get good comments from mygroup member. However, the weakness cannot be ignored that I lose my

interesting on the task gradually. I have not patient enough to concentrate

myself on the following stages after the brainstorming. Furthermore, team

cooperation becomes more important with the diversification of knowledge

in variety fields. Every person has their own characteristic; the roles played

on team had better be distributed based on the variety advantages team


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members possess. As a university student, I cannot deal with the complex

problems by myself; sometimes, team members discussion might enlighten

me and help me to complete tasks. (Frederick, Matthew and Michael, 2005)Every team members contribution will directly affect the team performance.

Therefore, I should try my best to conquer my weakness to make our team

perform better.

3. Personal Career Development

3.1 Lifelong Learning

Lifelong learning encompasses careers skills and personalities

developments aimed at flexibility of employability and personal

achievement. (European Commission 2001) In order to keep pace with the

increasingly knowledge-based modern society, it is more important for us to

learn new knowledge and technology without stopping. Learning is a

lifelong process, which has become a life pan target for people in the future

life and make learners to fulfil their achievement in careers. The aim of

lifelong learning is to develop ourselves to improve employment prospect

as well as the professional business skills to survive in the dramatically

competitive global economy. Lifelong learning is a relatively lasting

modification of behaviour based on the experience. (Birren, 1964) we will

be faced with variety challenges when working in the company. Some of all

arise from the knowledge shortage. At this situation, we choose to study

further about our work at spare time. Some are resulted from the weakness

of personality, which is difficult for us to overcome. We must concentrate on

the positive attitudes to the co-workers and tasks, developing outlook of

ourselves for skills and creativity.


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Houle (1961) argue that learning for every person received from two

education, the first is from our teachers; the second, more important, is

from ourselves in the workplace. In my opinion, university educationteaches me a lot of academic knowledge and handles professional skill of

my major. Besides that, I have learnt how to learn myself, which will help

me to continuous to learn independently after graduation. In terms of my

professional skill, independent learning becomes an important issue for my

lifelong learning. Only if I can study by myself that my lifelong learning will

be continued. For example of my professional skill learning, I focus on

learning the accountant knowledge. I have passed twelve subjects of AIA

(The Association of International Accountant) certificate, and I am trying my

best to reach the professional level of accounting. Because of the speedy

change of financial world, international accounting standards are often

revised, which will drive me to learn more and more. This certificate will

help my career and make me do more professional than other co-workers.

Therefore, the professional skill becomes my lifelong learning. After

graduation from the university, accounting information should be learnt by

myself. I should identify what I need, make realisable learning plan, find

appropriate resources to meet my demands and evaluate progress to the

learning goal. My achievement in accounting field will be the best reward for

my persistence

Regarding to the personality, overcoming my personality weakness is

another kind of lifelong learning. According to the previous questioners, my

weakness can be concluded as: easy to lose initial passion after complex

process of one project; feel bored with implementation and longer term

consolidation; dare to try new things. These might have a negative impact

on my future career. Co-workers might uncomfortable when I am around,


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because I cannot insist on the project throughout the overall process and

only have interesting on the fresh things. I must learn how to be patient to

take part in every step of project and make every effort to complete themsuccessfully. Therefore, overcoming my personality weakness becomes

another task of lifelong learning. Otherwise, my weakness will be obstacle

of my future career and life.

3.2 Transferable skills

Transferable skills are defined an ability to transfer a range of graduate

subject study to the workplaces and outside based on the real work

experience. (Fallows and Steven, 2000) The transferable skills can be

divided into more specific skills: communication skill, analytical skill,

teamwork skill, leadership and information technology.

Communication skill plays an important role in the success on my job,

which includes two aspects of oral and writing. Maupin (1993) argue that

the communication skills an d competencies are highly demanded in todays

team-oriented, service-oriented, and decentralized business environment.

When I make presentation to large or small groups, the information and my

opinion should be expressed clearly and efficiently. My speech should be

confidence and easy to understand by co-workers. However, negotiation

with customers is good opportunities to show my ability of communication.

A good employer can persuade customers to adopt my ideas and make

contracts with my company. The writing skill is important when writing

performance reports, records, specialized documents and correspondence.

These reports or documents should in a cogent manner and formal format,

because they are read by managers. A good report expresses my clear


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logic and opinion on my task and well-organized performance in workplace.

Therefore, communication skill should be attached importance; it will direct

express my good ability in my work to co-workers and managers.

Analytical skill combines with technique of intellectual inquiry and

professional knowledge. (Donald and Mary, 1987) My job might relate to the

financial analysis, I must have the ability to analyze the complex and

changeable financial world independence or group research based on the

obtained information and standard financial reports. My financial work

cannot be on the shallow level of conclusion the information be collected,

but concentrating on the process of information analyzing with my

professional accounting and finance knowledge. Analytical skill also will

help me when I am faced with hard projects. I am calm to find corn problem

and divide the project into several different process according to the order

of priority. Then, I can solve it step by step.

We cannot be isolated with others in our life, and the skill of teamwork plays

an important role in the relationship of co- workers. In todays economy

society, more and more issues cannot be finished individually; the

complicated tasks should be taken by teams. Procter and Currie (2004)

argue that teamwork is regarded as the important facilitators in achieving

effective and positive outcomes in different companies settings.

Establishing working relationship with team members is first step. Sharingand delegating responsibilities within the group should be based on the

good relationship with co-workers. Thus, team works go with a swing.

According to the results of Belbin test, my preferred role in team is resource

investigator. Every member takes their responsibilities of tasks based on

the considering of their different characteristics, which will make our team

work to be carried out efficiently.


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Effective leaders are highly demanded in complex business companies,

who make whole company running in good structure and employees

working under efficient management. Group works in the university built myleadership through distributing tasks to different style team members,

communicating with others, which help me build my leadership style in my

future career. A good leader is directly related to the company success,

because leader plays the role in motivating and inspiring employees to work

hard towards the targets. Pincus and DeBonis (2004) contended that

leadership strengthen human relationship by rust and understanding.

Therefore, a good leader will be flexible to adapt changes based upon the

difference situational factors; trust and encourage employees finish tasks;

be fair to every person based on their rewording. The leadership I possess

make me easy to communicate with co-workers and attract them follow my

idea to carry out certain project. The outstanding skill makes me have more

opportunities to gain the promotion.

Information technology is absolutely necessary for modern office work. All

kinds work should be recorded into computers, like sending E-mails;

entering data Information technology is the essential skill for office

employees, especially to the financial employees. Finance is a kind of work

to analyze different data emerging from difference economic system such

as stock exchange markets, company annual reports, banks and so on. Allthese data should be recorded and process in the computers. To a financial

employee, Windows Excel software should handle masterly.


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3.3 Career Choice

Within the increasing competitive, sophisticated, technical andcompartmentalized world of occupation and word (Herr, 2003), professional

skills help me to win the high rewarding jobs easier than others. Moreover,

the motivation of my career is to establish the social status and to fulfill my

achievement. It is no doubt that outstanding career life can fully express my

own value to the society.

Finding a suitable job is the essential issue for my career life. Regard to my

professional accounting skill (AIA certificate) and my major in Northumbria

University (Accounting and finance), working in the financial field is my first

choice. According to Myers Briggs test (Appendix A) I am good at

establishing relationship with others and easily keep the harmony within my

relationship. Some jobs of communicating with customers can take

advantage my personality. Therefore, financial consulter or customers

manager might be suitable for me. I can give my customers my professional

advices to help them make fund administration, business investment or tax

evasion in reason. An ideal job should combine my professional knowledge

with benefits of my characteristics.


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Section B

Part 1 introduction

1.1 Motives for the topic choice

The increasingly number and scale of mergers and acquisitions (M&As) are

taking place in countries throughout the world. It cannot be denied that

mergers and acquisitions have become one of the most important

corporate-level activities in the new millennium. (Hitt, Harrison and Duane

Ireland, 2001) The boom of mergers and acquisitions is resulted from high

profitability and liquidity of acquired company, whose manager become

over-confident throughout some good financial condition years, internal

growth cannot satisfy the company development demand, managers

decide to amplify the company through acquisition. Each twist or move of

the mergers and acquisitions activity can affect the performances both

acquirer firms and target firms. The bid battle attract a great deal of

attention from shareholders, employees even the local governments, which

make decisive effect on creation shareholders value, transfer of personnel

and so on. Because of the importance of mergers and acquisitions activities

to company growth and success in the trend of economy globalization, the

topic is worthwhile to be researched and analyzed. However, the strategiesof Target Company directly decide the characteristic of bid, whether is

friendly or hostile. Target Company plays initiative in mergers and

acquisitions activity. After taking into account the company strategy and

performance, the managers of target firm will take action to resist a bid for

the company. Therefore, my concentration of mergers and acquisition

research is on the effect on the target company.


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1.2 overall objectives

Mergers and acquisitions are undertaken by companies to achieve

company objective and strategy. The hot trend of M&As activities is the

widespread perception that acquiring other companies accelerate the

development speed of becoming multinational and extend the scale of the

acquirer company. It seems a shortcut to entry new foreign market to avoid

the entrance barriers and different culture cross. Furthermore, a successfulM&A activity can reinforce the competitive strength. However, mergers and

acquisitions have complex process and take large amount of money and

long period time to negotiate with target company, the results are always

dissatisfied that M&A activities do not create value for shareholders and in

fact loss a lot. (Hagedoorn and Duysters, 2002) The strategy of mergers

and acquisitions implemented within the company is high risky to face huge

amounts loss. On the other hand, challenges mean both opportunities and

threats. In some case, establishing a multinational organization has

become the core strategy and achievement for managers and shareholders.

It is inevitable that mergers and acquisitions is an important issue to

analyze.

In terms of the target company, some of which are faced with bankruptcy

are willing to be taken over by a financially sound organization to get them

out of trouble. Particularly suffered from the subprime crisis in 2007, a lot of

influential organizations announced collapse. It seems a good opportunity

for mergers and acquisitions. However, recovering from the recession for

the target company will face the revolution from the restructure of the

company to the change of the strategy. The effect of the M&A activity on


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them will attract concerns from shareholders, employees, economists. The

effect of M&A activity on the target company is dramatically. Therefore, the

central topic of this professional project concerns the possible effect thatmergers and acquisitions bring on the performance of target company. This

project regards mergers and acquisitions as a process rather than as a

transaction. Different stages make various effects on the target company.

Post acquisition period can be described as bid battle of acquiring company

and acquired company. The information of M&A activities process directly

related to the change of stock market. It is a proper time to create

shareholders value for the target firm. If the deal is agreed, restructuration

of the combined company will lead to the transfer of personnel. The

strategy and culture of the target firm will change a lot. This project is to

analyze the effect of on the target company on the different stage of

mergers and acquisitions. First of all, economic environment analysis

regarding what kind of environmental factors encourage more and more or

organization choose the M&A strategy to extend their scale. Secondly, find

different motivations for M&A activities. Thirdly, different model to valuate

the target company can be used. Fourthly, the effect of post acquisition

period will be analyzed. Fifthly, the effect of after integration on target firm

will be investigated. Lastly, summary and conclusions presents a synopsis

of the results based on the analysis.

1.3 part outline

Part 1: introduction

This part of the project outlines the inspiration for undertaking the chosen

topic and the project objectives for the investigation.


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Part 2: literature review

This part provides all academic information and essential knowledge about

the topic of the project. It critically reviews and analyzes the theories andpractices of Mergers and acquisitions. This includes a wide range of

definitions and sources to support project.

Part 3: summary and conclusions

The third part presents a synopsis of the results of the analysis based on

the previous literature review.


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Part 2: Literature Review

2.1 PEST Model of environment analysis of mergers and

acquisitions

Gort (1969) argued that mergers wave always happen when an increase in

general economic activity creates disturbance of the market. As the

economic disturbance theory indicated that mergers and acquisitions were

expected to boom to stimulate growth after the subprime crisis happened in

the year of 2007. While, the recession takes the major responsibility of the

mergers wave, the boom of mergers and acquisitions recently may both be

subject to wider influences. Therefore, the PEST model analysis helps

people to realize the economic environment of mergers and acquisitions

more objective.

2.11 Political factors

PEST model of the environment is made up of Political, Economic, Social

and Technical (PETS) dimensions. Political factors make direct effect on the

M&As activities. Regulations issued by government affect the decisions of

corporate managers. For example, after the housing bubble burst in US

2007, the high risk subprime mortgage made a domino effect on the global

economy. With the collapse of a lot of famous investment bank,

multinational organizations even the county like Iceland were faced with the

tough situation of bankruptcy. In order to copper with the financial crisis,

variety procedures were issued by government. The political pressure is

required to make the standing financial institutions to respond to changes in


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banking markets and recessionary pressure. Therefore, US government

officers arranged for mergers of failing banks with more or less rules

adjustments to the Federal funds rate1. The action is quickly followed by a

variety of policy innovation in 2008 to achieve the organization

consolidation. The revised regulatory encouraged the assets purchasing in

opening market and Federal Reserve would provide low rate short term

loans to acquirer companies. (Congleton, 2008) The changes of political

provide the impetus for mergers and acquisitions. A larger number of

managers seize the opportunity to reinforce their corporations.

2.12 Economic factors

Regarding to the economic factors, the fluctuation of foreign currency

exchange-rate should be taken into account for the mergers wave. Due to

the global recession, some sound and stable currency rates depreciate a lot.For example the sterling and US dollar exchange rate. According to Figure

2.1, pound/dollar rate was stable, fluctuated about $2 from the year of 2007

to the first half year of 2008. However, the subprime loan crisis hit the US

economy, and the effect spread to the UK. With the financial crisis

worsening, the pressure on the pound ongoing depreciated from the

second half year of 2008. The financial uncertainties saw the rate dropped

dramatically from $2 to $1.41 the closing value on January 2009. The

currency collapse and exchange rate depreciation make foreign investment

more profitable. (Aminian Campart and Pfister, 2004) The purchasing

power increased with the depreciation of the US dollar and pound for other

countries whose currency rates are still sound. It is a good opportunity to

1 In the United States, the Federal funds rate is the interest rate at which private depository institutions lendbalances at the Federal Reserve to other depository institutions, usually overnight.


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carry out M&As activities. Gonzalez (1998) argues that imperfect capital

markets actually encourage the mergers and acquisitions that lead to

undervalue the target firms assets. Therefore, the global mergers wave isaffected by the economical factors of dramatic depreciation of foreign

currency exchange rate.

Figure 2.12

(Source: http://www.miketodd.net/encyc/dollhist-graph3.htm )

2.13 Social factors

The social confidence influences the decision of corporate managers and

investors. (Nofsinger, 2003) Great deals of optimistical investors think the

tough financial condition will recover gradually; they catch the opportunity to

invest foreign countries due to the depreciation of US dollar and pound.

Interaction with others influences the social confidence, so more investors

follow the trend to acquire other firms lead to the economy come out of the

phenomenon of recovery. Furthermore, the open market and mature

financial standard help the extent of economy globalization. It is more

acceptable that core strategy of organization is to become multinational.
http://www.miketodd.net/encyc/dollhist-graph3.htmhttp://www.miketodd.net/encyc/dollhist-graph3.htmhttp://www.miketodd.net/encyc/dollhist-graph3.htmhttp://www.miketodd.net/encyc/dollhist-graph3.htm


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The efficient way to accelerate the multinational development is mergers

and acquisition. Successful entry to other counties can enforce the

competition compared to the important rivals. However, the governments inthe Third World published preferential policies to attract foreign direct

investment of developed countries. Therefore, the global trend, high

competitive environment and open market encourage big organization

carry out the strategy of mergers and acquisitions.

2.14 Technical factors

Hagedoorn and Duysters (2002) argue that the core technology provides

the impetus for a number of mergers and acquisitions. Technology updates

faster ever than before in the new century, grasping a certain core

sophisticate technology means creating profitability. The information

technology industry is a typical example to improve the assumption. Googleis the most popular search engine in the world. According to the figure 2.14,

because of its high market share, great deals of sponsors advertise on the

Google site. The high advertisement revenue attracts a lot of competitors

decide to entry the search market, like Microsoft. However, the searching

market is a new field to Microsoft that has not the core search technology,

the efficient way to enter the search market is to acquire other company

that handle the technology. Microsoft chooses Yahoo! as target firm. After

the bid battle, the new company called Microhoo search was established to

beat Google search engine. Therefore, the high technology can eventually

lead to improve profitability of company. The technical breakthroughs

encourage the M&As activities.


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Figure 2.14(1): search market share in UK

Figure 2.14(2): search market share in US

(Source: http://www.search-engine-market-share.com/ )
http://www.search-engine-market-share.com/http://www.search-engine-market-share.com/http://www.search-engine-market-share.com/http://www.search-engine-market-share.com/


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2.2 Merger Motives

The trend of economic globalization gives organizations great opportunityto expand business. Organizations decide to mergers with other firms for a

variety of motives, which can be divided into 4 parts: synergy, bargain

buying, managerial motives and third party motives. (Arnold, 2008)

2.21 Synergy.

Mukherjee, Kiymas and Baker (2004) argue that the primary reason for

mergers and acquisitions is to achieve operating synergies. Sirower (1997)

defines synergy is to reinforce the competitiveness and increase the cash

flows what the two companies are expected to accomplish independently.

The managers of acquirer companies believe that the new combined

company will have a greater value than the sum of individuals.

Underwriters fees, advisers fees, public relationship bills, stock exchange

fees and accounting fees can be reduced after merger. For example, if a

company decide to enter a particular market but lacks of the right know-how,

the efficient method is to purchase an existing firm in that geographical

market. The target company may have the famous brand in domestic

market. Once acquiring the company, the new combined company reduce

the advertisement cost to increase its name reorganization. A successful

M&A activity is based on the win -win formula; the acquiree company also

create incremental value. Due to the lack of advanced skills and enough

money to produce its products on a large scale, the merger will bring

cutting-edge technology from acquire company. Thus, the two companies

create more value together than apart because each gains something it

does not already have.


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2.22 Bargain buying

Arnold (2008) argue that an acquiring company has a management teamwith superior ability, either at running a targets operation, or identifying

undervalued company which can be bought at bargain prices. The

inefficient management do not make effort on maximizing shareholders

value but focus on their own interests. Such a firm might be valued low of

the stock price in the stock exchange market because the management do

not consider the good stock market image is important to them. Investors

will not interested in such kind of firms. However, the talented managers in

acquiring company have the ability to estimate the stock price is

undervalued of the target company. In this situation, the acquiring firm is

sensitive to go beyond the general public. It will acquaint with the product

markets of the target firm in order to value the target firm more accurately

than other investors. Therefore, the acquiring company that have the

superior ability can acquire company at bargain prices.

2.23 Managerial motives

The reason for mergers is to satisfy managers own benefit. If the business

performance of the company is satisfied and revenue increased every year,

the managers will feel rather pleased with themselves. Due to the good

financial condition of the company, the managers want more control power

to the company rather than pay more dividends to shareholders. At this

situation, they become over-confident with their decision and over-optimism

in evaluating merger opportunities due to excessive pride or faith in their

own abilities. They do not learn from failure evidence and convince that

they are talented to find the undervalued firms when others cannot. The


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phenomenon is called hubris spelt out by Roll (1986) Furthermore, when

the mergers and acquisitions is successful, the managers should take more

responsibility of the larger combined company, which means the managersshould be paid more than before and their pension should be enhanced.

Not only the higher salary but the high social stature they will have due to

the larger scale company and large number of employees under their

control. (Zhao, 2006) Therefore, the managerial motives impel M&As

activities.

2.24 Third party motives

The third party may involve in the mergers and acquisitions. For example of

customers comes from Dranove and Shanley (1995), the customers would

prefer the company with standardised, high quality and good service.

However, small companies cannot meet the demand of the customers, thenthe managers adopt M&As strategy to enlarge the company scale. This is a

customer reaction become a benefit motives of mergers several companies.

Like vehicle industry, customers prefer purchase the complete unit instead

of buying in small mechanical parts from dozens of suppliers. The

component companies are driven to mergers with other company to

produce complete unit to satisfy the customers need.

Professional advisors also can be included in the third part motives.

Advisors give professional suggestion should charge high fees in the M&As

activities. For example, accountant will assess the target value for the

acquiring companies; lawyers will study the mergers regulations and

monopoly references. These professional individuals will get much benefit

from mergers event. Therefore, managers of some companies will be


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encouraged to acquire other companies after consulting them.

2.3 Pre-acquisition Process of target companies

Mergers and acquisition is a complicated process and requires much workby many people. Before providing offer to target firms, the acquiring

companies are required to prepare the action thoughtfully of target

valuation, diligent planning and appropriate financing. (Hitt, Harrison and

Duane Ireland, 2001) However, these actions are not enough for the

successful acquisitions, because whether target firms cooperate with

acquiring firms is the important issue. Therefore, managers of companies

which become the targets of bid should consider whether to accept the offer

on a friendly basis or reject them and regard them as hostile bidder.

Schnitzer (1996) argue that friendly bidders mean a situation in which the

top executives accept the offer and are willing to cooperate with acquiring

firms during the acquisition process. Hostile bidders can be defined when

the top executives of target firm reject the bidder and are unwilling to agree

to a merger and acquisition. But the acquiring company continue to pursue

it. The cooperation attitudes of target firms make the bidder to be friendly or

hostile. Different characteristics of the offered bidder make different effect

on the target firms.

2.31 The effect of friendly bidders on target companies

The board of directors of a target company accept the buyout offer from an

acquiring firm resulting from the high price per share is satisfied their

demand and benefit the development of the target company. According to

the selfishly interest of managers in target companies, the managers might

be promised to gain a better deal than before. The target management

might be provided an acceptable degree of autonomy or allowed to keep


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their power and perks to rewarding their recommendation of the bid to the

target shareholders. In terms of the target companies development,

acquiring companies can lead the business of target companies to a higher level. (Sudarsanam, 2003) These kind of friendly bidders usually take place

in the small company acquired by the great organization. The organization

has enough finance support to carry out the acquisition. The salary and

pension of managers in target company will increase after integration

though the control power is eliminated; the share price will increase on the

day of acquisition announcement which will induce shareholders to sell the

shares of target company to make more profit. (Morck, Shleifer and Vishny,

1988)The mangers and shareholders are satisfying the merger offer due to

the high rewarding for them. Therefore, the bidder is defined as a friendly

bidder. If the shareholders of target company accept the offer, they will not

spend a large amount of money and time in hiring professional advisors to

counter the bidders. A friendly bidder led to faster and easier integration of

two companies and achieves high profitability and synergy. IBERDROLA

acquired Energy East is an example of friendly bidder. IBERDROLA is an

international energ y group, which has the worlds top wind power producer

and one of the largest utilities internationally. Energy East Corporation is

involved in exploring, production, refining and marketing of oil and gas.

(Datamonitor, 2004) As foreseen, each Energy East share value increased

to $28.50 on the day of acquisition announcement 25 June 2007. Thisrepresents a premium of 20.2% over the average share price for the 30

days prior to the offer announcement. The acquisition creates value for

shareholders of target company. Furthermore, as a result of the acquisition,

Energy east diversify the business field both geographically and

operationally, as well as the source of revenue become more than before,

which is benefit to the development of target company bring from the


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acquisition. Friendly bidder create win-win situation for both company, not

only shareholders but the target company get profound benefit of

acquisitions.

2.31 The effect of hostile bidders on target companies

For different motives for target companies, the managers might decide to

resist the bids. Managers might fully believe that keeping independence

from the acquiring company is the best way to maximize the value for their

shareholders, employees even the local communities. Sudarsanam (2003)

provided another motive that managers regard rejection as a tactic to

extract the maximum bid premium from the bidder for the value creation of

the shareholders. Or the managers are afraid of losing their authority, social

status, control power and prestige of their jobs after acquisition successfully.

Therefore, the managers of target companies should adopt effectivestrategies to make success in the bid battles.

2.32 Strategic anti-takeover defences of target companies

Poison Pills : a poison pill is a highly effective strategy to defence against

the hostile bid, which can be adopted by a board of directors withoutshareholders permit. There are two types of poison pills: Flip-in allows exiting rights holders (except the acquire) to purchase the

shares in the target company at a discount. At this situation, the shares held

by acquiring company will be diluted, which make the M&As activity more

expensive and more difficult. Flip-over allow shareholders to buy the acquirers shares at a


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discounted price after the mergers, which lead to the increase of

acquiring bid price and possibly the control of the firm in jeopardy.

(Kahan,2002)

Yahoo! is a good example of swallowing the prison pill when counter with

the bid battle with Microsoft. The offer of $33 per share cannot be accept by

Yahoo!, they choose to swallow the prison pill. The employee severance

plan can be regarded as the poison pill to defence against Microsoft. The

plan stated that employees of yahoo laid off within a year after the

acquisition. Yahoo would be eligible for severance, which would be reduced

from the original provision last two years. The plan also stated that the

election of a new board of directors is not considered a change in

ownership, nor is the sale of the company's search business. Yahoo!

announced that the settlement is in favour of maximizing shareholders

value and the interest of company to avoid distracting litigation. (Steve,

2008)

Corporate charter amendments : Corporate charter amendments are

used to defend against hostile takeover, which make the transfer of power

control of target companies more difficult. These antitakeover amendments

have carried out in various esoteric forms, which typically involve: Most majority voting provision states that over 75% shareholders of

target company is required to permit M&As activity with interested party. Provisions dictating temporally staggered terms for directors which

benefits target company to delay the effective transfer of control until

several years after a supermajority of voting shares are acquired.

(DeAngelo and Rice, 1983)

This method was explained by Grossman (1980) that the antitakeover

provisions is a part of shareholders response of target companies to a free


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rider problem linked to the tender bids, which is aim to make the control

transfer ineffective.

Financial restructuring : The aim of financial restructuring is to increase

firm value through restructuring a large range of managerial strategies.

Financial restructuring is primarily to red uce the size of a firms assets base

or to change the debt or equity of a firm. This method can be regarded as a

pure going-private transaction, in which the management of target

companies hold the equity stake to avoid hostile takeover from acquiring

companies. Following a going-private transaction, target firms choose to go

public again. (Rao, 1994)

Golden parachute : Golden parachute refers to an agreement between a

company and its executive employee, state that they will be provided extra

payments if employment is terminated like the change of ownership or

acquired by other organizations. Golden parachute is an effective strategy

to defend against the hostile bid, which can increased the acquiring cost to

the acquiring company. However, the strategy might induce the executive

management of target companies to the acquiring companies at very low

price due to the high payment according to the agreement. (Sebehela,

2010)

2.33 Stock price of target companies reaction to acquisition

announcements

Many empirical studies indicate that the share price of target company will

increase surrounding the period of a takeover is announced whatever the


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takeover is successful or failure. (Croci, 2005) In most cases, mergers and

acquisitions can create abnormal value for the shareholders of target

company. Cumulative abnormal shareholder returns, the differencebetween the expected return for the shareholders and actual return comes

from the mergers and acquisitions announcement, reflect the expected

value resulting from the synergy. Flugt (2009) declare that the target firm

will receive the statistically significant cumulative abnormal returns are on

average 14.92% in a five-day window surrounding the period of

announcement day. According to the study result of mergers and

acquisitions happened in US in the period 1975-1999, Schwert (1996)

found the abnormal return to shareholders of target firms increased by

10.1%. Jarrel and Poulsen (1989) found that the target equal to 28.99 after

researching a sample of 526 takover transactions of US in the period of

1963 to 1986, whereas Frank and Harris observation of a sample of 1989

UK target companies whose abnormal return increase 23.3% in the period

of 1955 to 1985. More recently, a similar pattern is studies by Goergen and

Renneboog (2004), they reported that the shareholders abnormal return

9.01%. These professional studies summarized that the stock prices of

target companies increase significantly ranging from approximate 9% to 25%

around the mergers and acquisitions announcement. Thus, based on the

previous studies and findings, mergers and acquisitions announcements

would lead to significant abnormal returns to shareholders of target firms.


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Figure 2.33 Short Term Studies of Abnormal Returns:

(Source: Creating Value from Mergers and Acquisitions pp.74)

Figure 2.33 presents the summary results of some of the major studies of

short-term performance following acquisition of control in target firms. The

shareholders abnormal return increase sign ificant around the

announcement, the dramatic growth of target share price is the market

direct reaction for the mergers and acquisitions information; the high share

price of the target company resulted from the acquisition information

release, which attract public concern about invest the target company, for

the high expectation for the target company no matter the management

accept the bid or not. Asquith and Kim (1982), investigating conglomerate

mergers, found that the shareholders of target firms earn significantly


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abnormal positive returns around the announcement period irrespective

whether the acquisition is a merger or tender. Therefore, the period around

the acquisition announcement is a good opportunity to create shareholdersvalue of shareholders because the high public attraction.

2.4 Post-acquisition effect on target companies

After the complicated acquisition deal has been closed, a new process of

company restructure, job realization, strategy renews and value creationstarts. Cartwright and Cooper (1996) argue that mergers and acquisitions

stress is created by uncertainty and fear of the unknown rather than the

change. Integration of two organizations is not so simply process as to

restructure the combined company and establish a new hierarchy of

authority. It also includes the integration of company culture, employees,

core strategies and other process and system. Different patterns of the

post-acquisition integration carried on the target companies will be

analyzed separately.

2.41 company cultural perspectives

Both acquired and acquiring companies has their different culture and theculture of the company is embodied in its beliefs, values, ideologies and

rituals. (Sudarsanam, 2003) The unique company culture can be regarded

as motives for the employees to performance efficiently and effectively and

the value resource to push them fulfils their achievement in the company.

Different culture compatibility between acquired and acquiring companies is

an important task to copper with, especially in the cross-border acquisition


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integration. Countries quite differ in terms of their culture. Different

countries have different language and manner. Cross-border acquisition

integration should respect other countries culture, otherwise poor culture fitor incompatibility is likely lead to culture conflicts, polarization, negative

evaluation of counterparts and unsatisfied atmosphere in combined

organization. The culture of target firms is driven to change to face with the

new integration organization, particular to the smaller target companies are

likely to cooperate with the culture of acquiring companies. The

organization culture is form with behaviour and ways of thinking that are

unique to the organization, which is fostered by leadership and system

within the organization. (Kern, 2004) It is inevitable that the remaining

managements and employees feel uncomfortable with the change. The

change of target companys culture might lead to the personnel transfer and

make loss of the integration organization.

2.42 Human resource change perspective

The target firms are face with the internal management change as well. The

new culture, system and authority structure in the combined organization is

likely to result to the unsatisfied mood of the management and employees.

The selfish genes of the human animal make employees to accept change

difficultly. Perhaps, most majority management resist and antagonize the

change. However, the employees of in the bottom level are fence-sitters

trying to figure which way to go. Margolis (2006) argue that employees of

the target firms have the lower probability of continued employment with

new combined organization in the short term after acquisitions. The

personnel transfer of target firm more concerned than the acquiring

company. In terms of the management level, they might are face with the


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demotion or control power elimination in the combined organization, which

will threatened their interests even more the salary and pension condition.

The worries from management of target firms will push them to choose tobe hired by another company. Due to the rich experience and customer

resources, the dimission of senior level managers is a huge loss to the

companies. Therefore, how to settle them is an important task. The choice

of the right person for the right job measures the success of the merger and

acquisition. Efficiency savings through integration is concentrated, head

count reduction is inevitable. Employees in the target firms might be

arranged to department or dismissed. Every employee is fear of the lay off.

Before everybody being settled down, the rumour makes employees fell

anxious and uneasy. At this special period, it is the responsibility of the HR

department to negotiate the details of the severance pay with employees.

(Cartwright and Cooper, 2000) Therefore, the big turnover of the staff in

target company cost a great amount of severance provision to pay the fired

employees. However, the lay-off also makes adverse effect on remaining

people, they will lose the fragile confidence to the new organization and

their contribution to the target firm before will be cleaned up at the new start.

Thus, the remaining employee suspicious that whether their effort to the

company will be emphasized on or not, they will not pay every effort to the

new companies until the new combined organization give them confidence

again.

3. Summary and Conclusions

In the past decade, mergers and acquisitions have become the critical

transaction in the economy world. More and more organization chooses

mergers and acquisition to broaden their business field and build up their


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market capitals. Particular to the cross-board acquisition, M&A activities

have been regard as the most effective short-cut to enter a brand-new

market. Furthermore the global economic condition, mergers andacquisition stimulate the recession to recover. Deals of acquiring

companies and acquired companies enlarge the market capital; the

negotiation information stimulates the stock exchange market and attracts

the concern of public. Investors also are encouraged to make investment to

the market.

The bids can be divided into friendly bid and hostile bid, which depends on

the attitudes of managers from target companies. The small or private

companies might be favour of the bid from big organizations. The owner of

the target companies will receive reasonable sum of money for selling the

companies. The acquiring companies have the ability to develop the target

companies to a higher level. However, hostile bid battles always happened

in two big organizations, whose strengths are almost equal. Takeover is

likely to be rejected by the managers of target firms due to the different

objective of two organizations or undervaluation to the target companies.

The negotiation of two companies cost a long period and expensive cost to

hire the advisors and consulters to help the target firms counter for

acquiring companies.

During the pre-bid period, a lot of evidence present that the shareholders of

target firms can create more money than acquiring companies resulting

from mergers and acquisitions. The stock price of target companies will

increase significant then the information of acquisition release to the public.

The abnormal return to the shareholders of target firms will range from

9%-25% surrounding the acquisition announcement period. No matter the


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bid is friendly or hostile; the shareholders will gain much abnormal return

from the process of mergers and acquisitions. After the acquisition deals

have been closed, the process of post-acquisition integration start.Integration of organization culture, system, process, strategies becomes

the most important tasks. Meanwhile, managers and employees of target

companies are uneasy and anxious about the uncertainty and fear the

lay-off. They are worried about the change of positions or be dimissed by

the new combined organization. Big turnover of staff is inevitable, which

make them cannot focus on the ordinary work.

In conclusion, mergers and acquisitions are complicated transactions; the

effects on the target companies cannot be simply analyzed in short assay.

The long-term effect on the target companies should further observed and

researched. Moreover, the changeable and unpredicted world condition

makes the M&As activities become more risky, new economic theories will

emerge with the development of the economic world.


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Reflective Statement

This professional project is intended to link personal development andprofessional career with four different psychometric questionnaires

supported to understand and improve myself effectively. Self analysis help

people find most suitable method to learning and working. Taking four

psychometric questionnaires into consideration, communication with

people is my advantage. I can easily establish the harmonious relationship

with people, different opinions from everyone will be considered carefully by

me and I am pleased to adopt others suggestion, therefore, I am not a

autocratic person in my career. Furthermore, if I become a manager, my

leadership is a participative leader. Good relationship with others and open

minded innovation will help me to fulfil my achievement in my career life.

When I conduct the section A of analyze myself, I feel it is not easy to

understand myself and the results of the questionnaires can enlighten me.

A series of professional suggestions from the results help me to realize

myself further and deeply. Only making the most advantage of mine can

make me to learn further or work in the future effectively and prevent me

going to a wrong way result to failure.

Furthermore, the achievement of academic and professional career is

based on the self awareness and development. After analyzing mypersonalities, the results show that analytical mind is my advantage that I

should take advantage it to improve myself in the career. An academic

piece of work about mergers and acquisition activities will be conducted to

relate my personalities to future career and social demand. The topic I

choose can present my analytical ability to the economic field. The boom of

mergers and acquisitions activities has become the hot issue for the


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economy field; my academic work is to analyze the mergers and

acquisitions effect on the target companies, which is classified with different

aspect according to the different period stages. The section B is moredifficult than section A. Every aspects of the academic study should be

conducted precisely. A great deal of reference should be used to support

my opinion to the topic of mergers and acquisitions. Therefore, collecting

resources cost a long period: I must read huge amount of journal articles to

find precise theories can support my opinions; appropriate cases in the real

economic life cannot be ignored to take the theories into practise and make

my assay more reliable and more professional. I also learn more academic

knowledge about mergers and acquisitions through my writing and

investigation. Some inaccurate opinions of the topic I held before are

corrected via reading a lot of journal articles. Conducting the professional

project can be regarded as a process of learning. The professional

knowledge intake is in the positive method by myself, while the knowledge

intake in the university is a kind of passive learning method. In my opinion,

positive leaning method is more likely to be remembered. In conclusion,

conducting the professional project is a process of learning for me and

helps me to know more professional knowledge which will benefit my future

career.

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Effect of Mergers and Acquisition on Target Companies

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