Impact of Mergers, Acquisitions and Internal Growth on Organisations

3196 words 13 pages
In this report I will be examining Mergers and Acquisitions, Internal Growth and the impact they have on organisations. The impact of mergers and acquisitions on organizations has seen a change in the way mergers were conducted in prior years before legislators put a stop on some companies that were merging due to change in the economy, technology and for a change in management of the firm. The reasons organsations are acquiring other companies are for dubious or sensible reasons that can be beneficial for share holders, but not only that, there is strong belief among corporate management that an acquisition or a merger is going to yield a great amount of revenue and be better competitors against other firms. Organic growth is a well-known …show more content…

Anthony (2008) noted that it is cheaper than other forms of growth i.e. mergers and acquisition. The above assertion was proved right in the case of Nigerian banking reform as The only bank that toed the path of internal growth (Zenith Bank) has consistently over the last few years been named as the best performing bank while its equity value in the stock market remained stable. On the other hand all other banks that went for mergers and acquisition experienced capital bubble bust and loss of equity value, poorer returns, weaker management structure, and poor overall perception by the depositors and investors (Sanusi, 2010). No external growth should be considered unless the organic alternative has been dismissed as inferior. Internal growth strengthens the structures of a firm, improving its offer to the consumers as well as making the management more committed and raising shareholders equity net worth. This is achieved through the management evolving strategies that involves tinkering with the technologies of the firm, new product development, intensive marketing, improved customer relationship and efficiency drive (Augustine Nart Kolo, 2007)

Types of Mergers and Acquisitions
Previous studies on Mergers and Acquisitions consistently discussed three types of Mergers and Acquisitions; Horizontal; Vertical; and Conglomerate mergers. However, Cartwright and Cooper (1992) and other writers mentioned and discussed a fourth type, which is


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