Mergers and Acquisitions Antecedents in BRICS

Opoku‐Mensah, Evans; Yin, Yuming; Sandra, Asantewaa Ampofo; Tuffour, Priscilla

doi:10.1177/0974910119887241

Cited by 9 publications

(14 citation statements)

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“…As the largest economy shifting from a central system to a market‐based economy, China provides the best case study for this research as the development in the country is uneven due to disparities in regional and sociocultural differences across locations. Moreover, China's remarkable economic growth attributable to firms activities such as M&A over the last four decades is worth investigating (Opoku‐Mensah, Yin, Sandra, & Tuffour, 2019).…”

Section: Introductionmentioning

confidence: 99%

Grabbing hand or helping hand? Ownership interventions and acquirers returns; the role of provincial idiosyncrasies

et al. 2020

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Firm's performance is not only influenced by sound decisions but also by institutional processes. This study argues that the effect of government intervention on acquisition returns is partly dependent on institutional factors such as provincial marketization and the legal environment. This study employs ownership and merger and acquisition regulations issued by the Chinese government 2003–2018 to measure government intervention and also employs both the OLS and the random effects technique. The result shows a positive relationship between ownership intervention and acquisition returns. Next, the study finds that variances in regional marketization and the legal environment strengthen this relationship such that acquirers in high marketization regions and acquirers in a robust legal environment earn higher returns than acquirers in a low marketization region and acquirers in a weaker legal environment. The results imply that acquisition returns are not even across all locations in a transitional economy. Ongoing policies should aim at bridging the variances in different locations as it impacts acquirers' returns.

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Section: Introductionmentioning

confidence: 99%

Grabbing hand or helping hand? Ownership interventions and acquirers returns; the role of provincial idiosyncrasies

et al. 2020

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“…It is recommended that firms, especially those who intend to make acquisitions, develop stronger ties to enjoy some governments' benefits. In the Chinese business environment, having stronger business ties with government officials is a great asset a firm can possess as the term “guanxi” is commonly used to describe such a relationship (Opoku-mensah et al , 2021).…”

Section: Conclusion Implication and Future Workmentioning

confidence: 99%

“…Management and business studies have identified factors such as strategic fit (Cornaggia and Li, 2019;Lee et al, 2018;Olcay et al, 2019), lack of due diligence during the preacquisition stage (Wangerin, 2019;Bi et al, 2020;Kumar and Sengupta, 2020) and challenges during the integration stage (Figueira et al, 2020;Kumar and Sengupta, 2020) as the contributors to M&A synergy creation. Finance and economics literature have identified how managers' characteristics such as chief executive officer's (CEO) traits, compensations, multiple directorships, board composition, political factors, financing sources and CSRrelated policies influence M&A success (Opoku-Mensah et al, 2019;Renneboog and Vansteenkiste, 2019).…”

Section: Literature Review 21 Determinants Of Merger and Acquisition ...mentioning

confidence: 99%

“…Merger and acquisition (hereafter M&A) is one corporate activity that impacts firms' ability to grow and penetrate new markets (Renneboog and Vansteenkiste, 2019;Utesch-Xiong, 2021). Due to the complexity of the acquisition processes, firms that adopt it invest vast amounts of money with the expectation of higher returns on their investments (Opoku-Mensah et al, 2019). Worryingly, most of these investments do not necessarily yield the intended synergy (Olcay et al, 2019;Renneboog and Vansteenkiste, 2019).…”

Section: Introductionmentioning

confidence: 99%

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Exploring governments' role in mergers and acquisitions using IVIF MULTIMOORA-COPRAS technique

Opoku‐Mensah

Yin

Asiedu-Ayeh

et al. 2021

IJOEM

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PurposeExisting studies have found that most merger and acquisition (M&A) activities do not create the intended synergy. These studies have mainly investigated how firms' internal factors contribute to M&A successes or failures. The current study differs from the earlier ones by exploring how governments' activities can contribute to the creation of acquisition synergy.Design/methodology/approachA novel technique based on multi-objective optimization by ratio analysis and complex proportional assessment method under an interval-valued intuitionistic fuzzy (IVIF) environment is proposed to prioritize these government roles needed during the M&A process focusing on the Chinese M&A market.FindingsEnactments of regulations and loan guarantees are the most important strategies to help Chinese acquirers overcome acquisition failures. While tax relief ranks third, government training support ranks fourth. Finally, the result shows that government institutional support is the least to help acquirers overcome acquisition failures.Practical implicationsThe government has a role to play in the acquisition success. Although this study has prioritized governments' role in relative importance order, the authors recommend that governments capable of providing all these strategies should do so without any specific order. However, if otherwise, governments should not neglect the strategies with less weight completely but rather consider reducing capital allocations to such strategies. Moreover, this study shows how firms with stronger business ties with government officials may enjoy success during acquisition activities. The authors recommend that firms intending to make acquisitions develop stronger ties with governments in order to benefits from governments.Originality/valueThis is the first study to develop a theoretical framework showing how government can contribute to M&A success. The study achieves this by extending Keynesian's arguments and identifies five (5) ways in which governments can ensure acquisition success. Second, within fuzzy multi-criteria decision-making (F-MCDM) research, this study is the first to show the applicability of integrated multi-objective optimization by ratio analysis (MULTIMOORA) and complex proportional assessment (COPRAS) techniques in an IVIF environment. The novel methodology proposed in this study offers an insightful research method to future studies focusing on group decision problems.

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“…listed companies EDCON (Businesstech 2020) and Group 5 (Creamer Media 2021) are striking examples. However, little is known about African mergers and acquisitions (Angwin et al 2016) and, specifically, those in South Africa (Opoku-Mensah et al 2019). In Europe, executing business rescue through a going concern sale requires (1) a bidding process, (2) a tool to leave debt behind (asset deal free and clear or share deal in a restructuring plan) and (3) a tool to test the agreed price, such as court scrutiny of the bidding process or creditor approval (Wessels & Madaus 2018).…”

Section: Introductionmentioning

confidence: 99%

A qualitative exploration of the bidding processes used in business rescue

Conradie

Lamprecht

2022

J. econ. financ. sci.

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Orientation: In business rescue, when pursuing the sale of the business to a third party, the business rescue practitioner (BRP) may use different bidding processes to interact with and select buyers.Research purpose: This study aimed to provide a framework to classify and describe the various bidding processes, including identifying the factors that would preserve value to the benefit of creditors and shareholders.Motivation for the study: Chapter 6 of the Companies Act is silent on the requirements regarding bidding processes. Therefore, the industry and legislator may benefit from guidance from industry experts.Research approach/design and method: Qualitative exploratory, using semi-structured interviews with 11 South African senior business rescue practitioners.Main findings: Three types of bidding processes were identified. In a sophisticated bidding process, information is communicated to buyers using a virtual data room. The second bidding process is less sophisticated; printed document packs are provided to bidders, and bids are submitted in tender boxes. Thirdly, the private bid-out process, where preferred bidders compete against each other in a closed envelope boardroom auction. The findings also revealed that deal certainty is more important in business rescue than ordinary mergers and acquisitions. Moreover, an equitable value, rather than a general market value, is often applied because of the bidding process. Lastly, the study identified a need for the pre-involvement of the BRP before a company files for business rescue, an aspect not currently allowed by the Companies Act.Practical/managerial implications: BRPs can benefit from the explication of the types and detailed steps of bidding processes. Moreover, the findings fill the void of limited guidance in the Companies Act.Contribution/value-add: The classification and description of the various bidding processes and key considerations in the context of a business rescue will assist BRPs in South Africa in preserving value under business rescue and guide the legislator in amending the Companies Act.

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Mergers and Acquisitions Antecedents in BRICS

Cited by 9 publications

References 51 publications

Grabbing hand or helping hand? Ownership interventions and acquirers returns; the role of provincial idiosyncrasies

Grabbing hand or helping hand? Ownership interventions and acquirers returns; the role of provincial idiosyncrasies

Exploring governments' role in mergers and acquisitions using IVIF MULTIMOORA-COPRAS technique

A qualitative exploration of the bidding processes used in business rescue

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