International Mergers and Acquisitions??

Hey guys~ glad that you are spending your precious time to have a look through my blog.  The following contents which you are going to read are about International Mergers and Acquisitions (M&A). 

M&A refer to consolidation of companies that take place beyond one specific country. The word ‘mergers’ here stand for combination of two different firms to form a new firms, while an acquisition is the act of purchasing one firm by another firm with no new company formed. M&A has been growing rapidly and have experienced waves of popularity which plays an important part of business in the world today.

 In the week’s lecture, I have learned that some of the merger motives are due to synergy, superior management, economics of scales, tax advantages and so on. However, do firms in the real world merge globally to obtain strategic benefits in the markets?  Do you think M&A is a good idea to gain beneficial advantages to the firm?  After having read some of the articles online, I think that M&A is an excellent way for firm to grow stronger as it is cost saving, risk diversifying , grow in speed and so on.

Let’s talk about the International merger and acquisition which involved City Football Group(CFG) and China Media Capital(CMC) which announced recently. This merger allows CFG to fund its growth in China by using capital from the share acquisition. It gives them the opportunity to expand in international business as well as developing infrastructure assets of CFG. On top of that, they are allowed to postpone their capital gain tax and maintain interest rate at a certain level. What do you think of this mergers and acquisitions?  Well for me, I think that Manchester City have made a good choice for merging with CMC as it provide growth opportunities for both the parties since Manchester City Football Club has the chance to evolve themselves with China’s incredible track record of creating value. Meanwhile in China, opportunity can be created to facilitate Chinese football from different aspects within the ecosystem. 

Despite the pros of M&A, how can we not forget the cons of it? What disadvantages can you think of for merging and acquisitioning internationally? Have you thought of the negative impact of cultural differences in International Mergers and Acquisitions? Previously, I personally thought that International M&A will only bring advantages for companies with no harm. Netherless, after going through some articles about International M&A,I then think that International M&A may bring negative effect to the parties involved as there will be problems in communication, leadership and trust. Furthermore, if one party is not aware of his partner’s corporate culture or national culture, the mergers or acquisition might be fail. One example is Damiler’s failures to integrate with their international partner which is Mitsubishi. Issue of national culture arose when Daimler did not adapt any Principles of Japan business culture and local practices. 

Although there are disadvantages of International M&A, i think that the benefits surplus the harms. Problems like cultural difference can be coped by practicing, communicating and acknowledging culture of each other. i would strongly prefer International M&A than operating a firm in a limited range.

So… will you merge or acquire another company if you have the ability to? Do not hesitate to tell me your thoughts and opinions. Do leave a comment below and tell me your answer.