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Category: Business and Industry
Date Submitted: 12/12/2015 12:55 PM
A Risk Management Model
for Merger and Acquisition
B. S. Chui
Sage International Group Limited, Hong Kong
Abstract In this paper, a merger and acquisition risk
management model is proposed for considering risk
factors in the merger and acquisition activities. The
proposed model aims to maximize the probability of
success in merger and acquisition activities by managing
and reducing the associated risks. The modeling of the
proposed merger and acquisition risk management
model is described and illustrated in this paper. The
illustration result shows that the proposed model can
help to screen the best target company with minimum
associated risks in the merger and acquisition activity.
Keywords Merger and Acquisition, Risk Analysis, Risk
Management
1. Introduction
Driven by globalization, international business looks for a
bigger market to achieve the scale of economy, so as to
overcome the economic barriers. Many organizations
adopt merger and acquisition (M&A) as a part of their
corporate strategy to achieve their business objectives.
M&A is a kind of transaction that can upgrade and
optimize the capital structure of companies with a
transfer of ownership and property rights. M&A has
already been developed with one century of history in the
world and give rise to merger and acquisition waves over
the world sixth times since the 1990s. Benefits of M&A
include increased economies of scale, increased market
share, enhanced efficient resource allocations, expanded a
larger asset base, increased reputation or added name
recognition, and instantly adopted expert talent lacking
International Journal of Engineering Business Management, Vol. 3, No. 2 (2011)
37 International Journal of Engineering Business Management, Vol. 3, No. 2 (2011)
Vol. 3, No. 2 (2011) ISSN 1847-9790, pp 37-44
in one to the other organization. Moreover, organizations
use M&A to penetrate into new markets and new
geographic regions, gain technical/management...