Term
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Definition
| Two firms that decide to integrate theri operations on a reatively co-equal basis |
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Term
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Definition
| one firm buy 100% control ownership/interest of a firm inorder to make the acquired firm a subsidary of its portfolio. ( example would be BofA aquiring ML to their financial services portfolio) |
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Term
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Definition
| a special type of acquisition where the target company does not solicit the acquiring firm's bid/offer |
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Term
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Definition
| Unifriendly takeover that is unexpected and undesiring from the target firm |
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Term
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Definition
- Increase market power
- Overcoming Entry Barriers
- New Product Development
- Increase speed into another market
- Lower risk compared to developing new products
- Reshape firm's competitive advantage
- Learn and develop new capabilities
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Term
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Definition
| Acquiring - company in the same industry |
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Term
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Definition
| acquiring - supplier/distributor of one/more goods in order to control the VALUE CHAIN |
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Term
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Definition
| Aquiring - firm in a highly related industry |
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Term
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Definition
| HQs in different countries |
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Term
| Problems of achieving diversification |
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Definition
- problems in integration
- lack of evaluating target
- too much debt
- not able to achieve senergy
- too much diversification
- managers focus too much in acqustions
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Term
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Definition
| financing option: used to finance a very risky aquisition with money(debt) that provide a high return to bondholders |
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Term
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Definition
| Value created by units...exceeds value of units working independently |
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Term
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Definition
| it is achieved when two firms assets are complementary in a unique way |
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Term
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Definition
| Occurs when the combination/integration of aquiring and acquired firm's assets yield core competencies/capabilities that can not be developed by combining/integrating assets with other firms |
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Term
| What does diversifcation cause managers to do ? |
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Definition
| causes them to rely too much on financial rather than strategic controls to evaluate performance of business units |
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Term
| What can acquistions be a subsitute for? |
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Definition
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Term
Reason that managers focus too much on acquistion can lead to -- Managing the integration process after the acquisition
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Definition
| Diverts attention from matters necessary for long-term competitive success (I.e., identifying other activities, interacting with important external stakeholders, or fixing fundamental internal problems) |
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Term
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Definition
a control of different units which lacks flexibility - its a formalized supervisory and behavioral steps to ensure consistancy of decisions and actions
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Term
| Problems in Acquistion - when the acquisition is TOO large |
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Definition
- the cost of having an acquisition may exceed the benefits of economies of scale
- Larger size may lead to more bureacratic control
- may lead to less innovation
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Term
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Definition
- Completementary assets or resource
- integration of firms become easier
- Effective due dilegence process
- Financail Slack
- Low debt position
- Innovation
- Flexibility and adaptability
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Term
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Definition
| Firm changes set of businesses and financial structure |
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Term
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Definition
| reduction in number of firms employees/business units that may/may not change the composition of businesses in the company's portfolio |
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Term
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Definition
eliminating businesses unrelated to firms core businesses through divesture, spin-off, or some other means
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Term
What are the three restructuring strategies?
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Definition
| Downsizing, Downscoping, and Leverage Buyouts |
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Term
| Three types fo leverage buyouts |
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Definition
Managerial, Employee, Whole-firm buyouts
MEW |
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Term
| Why do we have leverage buyouts? |
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Definition
- Protection aganist a capricious market
- Allows owners to focus on developing innovation
- a way that may lead to more entrepreneurial efforts
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Term
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Definition
| when a firm buys all of the assets of the firm inorder to take it private |
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Term
- Short-Term Restructuring Outcomes
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Definition
- reduce costs
- focuses on strategic control
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Term
| Long-term Restructuring Outcomes |
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Definition
- Loss of Human Capital
- Performance low/high
- Higher risk
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Term
| What can high debt cause? |
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Definition
high chances of bankruptcy
downgrade in firms currency
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