Mergers and Acquisitions in the Current Market Economies

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Table of Contents

Introduction
Literature review
Methods of data collection
Ethical issues in the research
Data analysis
Limitations of research
Conclusion
Reference list

Introduction

Mergers and acquisitions have become popular in the current market economies. This has seen many a researcher petitioning for a portion of knowledge to establish the reasons for their popularity. Points of interest are the reasons for their causes. Their causes have associated outcomes. The outcomes can be positive or negative. Despite their popularity, some mergers do not hold-they fail. Interest is directed towards strategic and operational management issues related to mergers and acquisitions. The question of interest has been to research the causes of mergers. While learning the causes, we shall not be limited to present-day case studies of mergers. Therefore, research must cover the history of mergers and acquisitions over a discernible period. The choice of the period, therefore, is critical to making comparisons in differences, if any, between the present-day mergers and early mergers. Comparisons will help to establish the trends in improvements of mergers and acquisitions. If there are improvements, some question to ask or answer is, are there lessons to learn from the mergers.

Literature review

Mergers and acquit ions are important strategies in a market. Early research has provided substantial information on mergers and acquisitions. Such writers are Weston and Weaver (2004) put forward the theory and practice of mergers and acquisitions. They argued that there are dimensions that considerations of mergers are put in place. One such consideration is, as put by the two authors’, puts in mind the benefits of small market players that practice on a market. Besides, postulates have been put forward concerning mergers and acquisitions concerning tax incentives. It is clear from the explanation of Auerbach (1991) that more tax benefits accrue at a corporate level for firms merging as opposed to a company operating alone. Operational and tax issues affect mergers to a substantial extent. There is a risk of combining companies of firms, observed by PricewaterHouseCoopers (2006), which must consider the benefits of increases in income of the merged firms with a critical analysis resulting tax changes. Some income increments that lead to doubling or near doubling in taxes render mergers unsuccessful. In the perspective of strategic issues, planning is usually viewed as a growth strategy for small companies. This is usually an option of a firm that views internal growth as having a slow pace (Rock, Rock, & Sikora, 1994). These authors extend their arguments by outlining the strategies that companies adopt for possible mergers. Operational management in acquisitions is handled concerning systems and data drawbacks. Difficulties always emerge when marketing and sales units call for combination (Cheverton, Foss, Hughes & Stone, 2005). Despite the difficulties put forward above, literature provides suggestions to ways of reducing them to make a merger successful. An acquiring company is advised to retain key staff from the acquired company. This has the benefit of retaining expertise within the merger (Daniel & Metcalf, 2001).

Research question

What are the causes, benefits and challenges of mergers and acquisitions in market economies?

Design and methodology

This research will employ qualitative research methods largely. The mention of qualitative methods does not disqualify incidences of quantitative means. A cross-section of companies that merged over a period will be investigated. A probe into the causes will also be looked into. This study targets big name brands of companies that were once small but became market giants due to mergers. The setting extends of the will not, therefore, be limited to a local scale. To gain more insight into the research question posed above, international companies’ information can be easily obtained via contacts available on the internet. The inclusion of international companies serves to widen the scope of the research. In the light of the population of the study, random sampling is the choice for obtaining the sample (Kumar, 2005). The study sample will be randomly selected from the population of companies based on the scope of the study as mentioned. Participants in the study will be varied according to the period of acquisitions. The intention for the variations in the period of acquisition is to fulfil suspicions that the reasons for mergers in earlier times may have been different from today. Secondly, there is a need to establish popularity differences in early mergers as opposed to mergers today. Having coined the study objectives of mergers concerning time, this study has mentioned variations in early mergers. Reference to early mergers takes the study mergers and acquisitions that happened from the period 1990 to the year 2001. Today’s time, therefore, covers the period from 2001 to date. It is evident that the study seeks to answer the question based on a period covering nearly 21 years. Embarking on participants in the study, Chief Executive officers (CEOs), Company presidents and possible members that were included in the mergers will be targeted for the research.

Since the two periods for the study covers two decades, sampling will be done randomly to obtain two study samples from the two periods of the study. For the period covering 1990 to 2001, archival information of companies that merged will be obtained from relevant sources such as the internet. This will also apply to present period merged companies. Through random sampling, 20 study companies will be selected for the research (10 companies apiece). It is appropriate that former and present employees of the target companies are included in the study as participants.

Appropriateness of the design and methodology

The research seeks to answer the question into the causes, benefits and challenges of acquisitions and mergers. The choice of qualitative research methodology is deemed appropriate since it is inclined closely to the needs of the study question than mixed or quantitative methods (Slugoski, 2008). Alternatives to this study methodology and design are mixed and quantitative techniques. However, they were not chosen because of a lack of full inclination to the study question.

Methods of data collection

Qualitative data will be used in the study. These include open-ended interviews, questionnaires and permanent records. Since only qualitative data is used in the study, the methods will be mono data (Johnson & Christensen, 2010). It was mentioned earlier in the course of this research that the sample would consist of 20 companies for the merger. Since the participants will be CEO, presidents and employees, the sample size to be selected will constitute the three participants. Sample selection will be done randomly for the two categories of periods of the study to come up with a sample size of 100 participants. The 100 participants would comprise an equal number of participants selected from the two periods. To ensure the success of the study, a pilot study will be done using our team members stationed locally and internationally. The pilot study would intend to determine the ease of data acquisition in the main research. The pilot research will also be helpful in the identification of possible bottlenecks before the main research (Russell & Purcell, 2009). Interviews will be conducted based on the convenience of the participants. Phone calls will be made to the participants, requesting them to participate in the interview process for research. After reaching an agreement with the participants, the venue will be set for the exercise. To enhance the better collection of data during interviews, voice recorders will be used as a backup for field notes that shall be written.

Questionnaires will be our second tool of data collection. In addition, it will also be the main method of data collection. Following the above example used for interviews, contacts of potential participants will be obtained. After contacting the participants, a request will be made explaining our study intentions and the reason their contribution is important to the establishment of knowledge. This helps to draw confidence from the interviewees leading to a collection of reliable data. The second phase of interviewees relates to the administration of the questionnaires. Two main means that will be employed are mailing and hand delivery. A mailing will target employees and other participants who are geographically dispersed; international participants. To get answer the research question, we expect response rates of higher than 55%. This is justified by considering that a pilot before the main exercise will precede the research. It is possible to obtain the information and intended data since there is the availability of participants that are reliable sources of information in the course of the research process. Furthermore, the design used to obtain information ensures that correct participants are selected. The selection of company presidents and CEOs will avail accurate information about the merger and acquisition process. In addition, participants have been profiled and stratified treatment so that relevant questioning. If the CEOs can volunteer technical information, there is no doubt that employees who have been in mergers will give their opinion of the merger and acquisition process. After issuing the questionnaires, a follow up will be made so that the filled questionnaires are returned. We shall enhance high response rates from questionnaires by covering the mailing expenses of the customers after the questionnaire is filled.

Ethical issues in the research

During the entire research process, there is an expectation of coming in contact with ethical issues. In the first place, participants will be giving information to the research team in direct contact. Consequently, participants may have information that is rated as classified yet they are willing to volunteer is due to the study. This brings in an issue of participants’ privacy (Padgett, 1998). To protect the privacy of the participants, no information of the participants will be singled out. This will be ensured by the lack of inclusion of the participants’ identification details in the research report. Secondly, the research may be conducted in regions, which hold on to some cultural and religious beliefs. If such is encountered during this study, strict observation will be put in place to bolster trust from the participants (Babbie, 2010).

Data analysis

Data will be analyzed using various methods such as graphs, tables and pie charts. In the first place, proper data rerecording during the data collection process will ensure ease of analysis (Dey, 2003). The graphical method will be among the chosen methods. Raw data from the participants will be analyzed based on the numerical recording of the respondents’ answers. Former researchers to be appropriate for the analysis of qualitative data have praised this method. In the light of graphical methods, the research seeks to answer the question about causes, benefits and challenges of mergers. This presents three variables against which knowledge will be established. For each variable, the number of respondents will be plotted against a chosen scale for the data analysis (Miles & Huberman, 1999). Graphs have the benefit of enabling critics to visually observe the analyzed data and make conclusions. Gnanadesikan, (1983), confirms the fact that graphical methods help to improve the quality of the raw data from the field. He further supports graphical methods as important when transitioning the data analysis process from one stage to another. Because researchers support graphical methods of data analysis, it is not an exception therefore to be selected as a method of data analysis. To conclude, it is a justified means of data analysis. We, therefore, have to adopt these methods in the research of this topic. We expect the results to be of high significance in the making of the conclusions regarding

Tables will also be used to present and analyze the data. Although they are not far from graphs for data presentation, they play an important role in the presentation and interpretation of data.

Another method of data analysis is the use of statistical packages like the Statistical Package for Social Sciences (SPSS). Such packages are installable on personal computers so that they can be used in the analysis of data. They are the most preferred method because of their accuracy. Statistical packages offer many dimensions of analyzing data. Correlation relationships can be established quickly by the use of such statistical packages. In our example, we seek to answer the question related to the benefits causes and challenges of merging and acquiring firms in a market economy. Should we, therefore, establish that there are benefits in merging; it can be empirically proved and analyzed by employing correlation with SPSS (Field, 2000). Secondly, the data collected can be analyzed by regressing it using statistical packages. This will be an important method of analyzing the data. Because of the accuracy of the statistical packages, they will be employed extensively in the analysis of the data.

Limitations of research

There are limitations to this research that we expect to encounter during the entire research. In the first place, the research requires that participants be selected from a wide geographical coverage. This has a cost limitation to the conducting of the research. This will be overcome by using phone interviews with the participants from overseas companies that may contain valuable information for the conducting of the research. Secondly, due to the classification of information in the world of business, some companies are secretive with their most important information on mergers and acquisitions. As a result, the information collection process may be impeded by such characteristics. However, information collection will be based on an open approach of the administrations of concerned companies to establish knowledge. Furthermore, any doubts from the participants will be mitigated by assuring the participants of the limited user information they deem classified in the interest in our report.

In addition, the research shall have a limitation of tracing important personnel to be interviewed to obtain merger information for the period 1990 to 2000. This will be a big limitation particularly for mergers that took place in the early 1990s. There is a big threat to the comparative analysis of information related to the causes, benefits and challenges of mergers that took place in the 1990s as opposed to the period. One biggest threat is the expectation that participants of the older companies may not be alive. The ones that replaced them may have been modern-day ideas pertaining to mergers and acquisitions. This can be overcome by sourcing primary data from the archives of the concerned companies. Since we would have pilot research that proceeds, this limitation is weighed against the outcomes of the pilot research.

The above limitations are collectively mitigated through a review of other works of researchers done earlier. There is information through literature provided by other early studies on the topic. Such works can act as a good reference point to the limitations encountered when doing the same research work. The importance of such works enhances the internal and external validities of the research work on mergers and acquisitions (Gravetter & Forzano, 2009). Lastly, the research has only provided an insight into the causes and challenges of mergers and acquisitions. Consequently, it is limited to the current scope in which this research has been taken. However, this can be overcome through intensive research in this field. Besides, the limitation of this research is welcome external criticisms to the way the research was conducted. This will help reduce scope limitations

Conclusion

Mergers and acquisitions are important in market economies. This can be a good field for the choice of research in order to investigate the courses and benefits as well as challenges. However, a good research problem may be hindered if the researcher does not have good background information on the problem. The importance of literature review provides the readers or critics with the flow of the entire research. There is more to good research when the literature review is coined to reflect the research problem. As a result, the research question(s) can be easily formulated from the literature review.

Secondly, an appropriate research methodology must be decided to help reach the objective of the research. Caution must be taken when choosing the research design and methodology. The research design chosen must be outstanding so that it is appropriate concerning alternatives. For this study, the chosen research design is appropriate against the alternatives.

In addition, a good research methodology precedes successful data collection. As realized, one processor research step is an usher of another step. In the light of the above statement, this research will employ the most appropriate data type. The data type chosen is also appropriate since it is related to the research design selected for the study. Besides, it is also aligned with the research question. Its appropriateness makes it the choice. Overestimates of the success of research can be disastrous if the sample is not properly selected from the population. Nevertheless, most researchers conduct pilot research that helps to mitigate the effects problems associated with the main research. This research will also employ pilot research that will establish problems that may be inherent with the research of mergers and acquisitions in market economies.

Lastly, the research having been conducted requires the presentation and analysis of data. Consequently, we must give the results to interested parties so that criticism is made. Many ways of data analysis are present in form of software (statistical packages) or visual aids through graphs, tables and pie charts, just to name a few. Analysis forms the conclusion the climax of the research process. Ethical issues also play an important part in the research. These issues must be identified throughout the research process and mitigated. This research has put forward identified ethical issues that will be addressed in order to make the research a success. In conclusion, the research has adopted a relevant approach in the establishment of the missing knowledge gap about mergers and acquisitions.

Reference list

Auerbach, A.J. 1991. Mergers and acquisitions. Chicago: University of Chicago Press.

Babbie, E.R. 2010. The practice of social research. New York. Cengage Learning.

Cheverton, P., Foss, B., Hughes, T, & Stone, M. 2005. Key accounting management in financial services: tools and techniques. London: Kogan Page Publishers.

Daniel, T.A., & Metcalf, G.S., 2001. The Management of people in mergers and acquisitions. Westport: Greenwood Publishing Group.

Dey, I. 2003. Qualitative data analysis: A user friendly Guide for social Scientists. London, Routledge.

Field, A. 2000. Discovering statistics using SPSS for Windows. London: SAGE Publications.

Gravetter, F.J., & Forzano, L.B. 2009. Research methods for the Behavioral sciences. Belmont: Cengage Learning.

Gnanadesikan, R. 1983. Statistical data analysis. Ontario: AMS.

Johnson, B. & Christensen, L. 2010. Education Research: qualitative, quantitative and mixed approaches. California: SAGE Publications, Inc.

Kimel, A.J. 2007. Ethical issues in behavioral research: basic and applied perspectives. Victoria: Blackwell Publishing.

Kumar, R. 2005. Research methodology: a step-by-step guide for beginners. London: SAGE Publications Ltd.

Miles, M.B. Huberman, A.M. 1999. Qualitative data analysis. London: SAGE Publications.

Padgett, D. 1998. Qualitatitive methods in social work research. Challenges and rewards. London: SAGE Publications.

PricewaterhouseCoopers LLP. 2006. Mergers and Acquisitions. New Jersey: John Wiley & Sons, Icn.

Rock, M.L., Rock, R. H., & Sikora, M.J. 1994. Mergers and acquisitions handbook. New York: McGraw-Hill.

Russell, B. & Purcell, J. 2009. Online research essentials: implementing and designing research studies. New Jersey: John Wiley & Sons, Icn.

Slugoski, E.V. (2008). Employee retention: Demographic comparisons of job embeddednes, job alternatives, job satisfaction and organizational commitment. Parker: ProQuest LLC.

Weston, J. F., & Weaver, S.C. 2004. Mergers and acquisitions. New York: McGraw-Hill.

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