CULTURAL AND FINANCIAL ANALYSIS OF MERGERS & ACQUISITION

Abstract

Even though mergers and acquisitions (M&A) have been an important element of corporate strategy all over the globe for several decades, research on M&A’s has not been able to provide conclusive evidence on whether they enhance efficiency or destroy wealth. There is thus an ongoing global debate on the effects of M&A’s on firms. Mergers and acquisitions have become common in India today just like global market. However, very little appears to be known about the long-term post-merger performance of firms in India, and the strategic factors that affect this performance. This projects aims to study some general principals of M&A and discuss two different cases:  Amalgamation between TCS & CMC  Acquisition of Jaguar and Land Rover by Tata Motors It has been noticed in past few decades that most of the M&A do not succeed and after initial years of post-merger or post-acquire, the synergy breaks up and corporation choose to demerge. It is up-most important for any organization to give equal advantage to culture associated with M&A and not just financial benefit. Amalgamation of TCS and CMC provide required information on valuation, financial studies, laws and analysis, and on the other hand acquisition of Jaguar\Land Rover by Tata Motors emphasis on the impact of culture for a successful M&A. Valuation is the process of estimating the market value of a financial asset or liability. Valuations can be done on assets (for example, investments in marketable securities such as stocks, options, business enterprises, or intangible assets such as patents and trademarks) or on liabilities (e.g., Bonds issued by a company). Valuations are required in many contexts including investment analysis, capital budgeting, merger and acquisition transactions, financial reporting, taxable events to determine the proper tax liability, and in litigation. Despite the clear linkage between culture and deal success, many organizations fail to even track culture and other people-related metrics as part of their overall transaction metrics. Although nearly 80% of respondents in our study track formal measures of deal success, a significantly lower number track culture alignment (44%) as well as some of the other key people-related metrics that the survey has shown to be directly related to culture alignment. Given the significant influence of culture on deal success, it clearly is a topic that leaders cannot afford to ignore during a deal.