In other words, acquisitions are difficult to achieve. The acquisition is perceived either as friendly or hostile depending on how the idea of buying the target company is communicated. In friendly cases, the negotiations are done in private that every deal is based on mutual agreement with the companies involved. In case of the hostile acquisitions the target company’s boards of directors are caught unawares. The company is sold without their knowledge, (Mikael & Jani, 2011). Hostile acquisitions can end up being friendly acquisitions with time. This happens due to improved terms of agreement after the procurement process.
When we talk about acquisition, we are referring to a large company or organization procuring a small company. There are instances where the smaller company acquires the control of larger company but chooses to retain the name of the company. In such cases, the process is referred to as reverse takeover. In the case of a reverse merger acquisition, a privately owned company joins the public list in a relatively short time. This happens when a private company buys a publicly listed company, (Cassiman & Colombo, 2006).
The private company becomes the more ambitious company with bigger prospects. Implications of acquisitions and mergers The process of acquisition can leave the customers thinking that the new brand is superior and therefore can be trusted. When most of these processes are supposed to be private in nature, the customers end up knowing. Therefore they can perceive the process to be a loss or a profit based on their understanding of the e companies involved and how he process was conducted, (Phene & Tallman, 2012). There are cases where foreign companies buy local companies and that ends up creating a sense of resentment from the local consumers.
This is because in some markets, customers want to be loyal to the domestic industry. There are instances where renowned brands acquire new companies and receive overwhelming support just because of their standing reputation. It’s rare for customers to care to know the details of the negotiations and what really transpired in the entire process, (Cassiman & Colombo, 2006). Perceptions influence the customer reactions. To this extent, hostile acquisitions are not always good.
Strategic mergers in most cases means holding of the target company after a long-term strategy. This process targets at having synergies and increased market share. This ends up increasing the customer base and renewing the corporate strength of doing business.
Cassiman, , B., & Colombo, M. G. (2006). Mergers & Acquisitions: The Innovation Impact (1st ed.). Retrieved from http://books.google.co.ke/books?id=KH8zpajEYssC&dq=mergers+and+acquisition&source=gbs_navlinks_s.
DePamphilis, D. (2008). Mergers, Acquisitions, and Other Restructuring Activities (2nd ed.). Retrieved from http://www.amazon.com/Mergers-Acquisitions-Restructuring-Activities-Edition/dp/0122095529.
Finkelstein, S. (2010). Advances in Mergers and Acquisitions (1st ed.). Retrieved from http://books.google.co.ke/books?id=CHYB85ip1d4C&dq=mergers+and+acquisition&source=gbs_navlinks_s.
Mikael, C., & Jani, K. (2011). A Procedure for the Rapid Pre-acquisition Screening of Target Companies Using the Pay-off Method for Real Option Valuation". Journal of Real Options and Strategy, 4(1), 117-141.
Phene, , A., Almeida, P., & Tallman, S. (2012). Mergers and Acquisitions. journal of management, 753-783. doi:10.1177/0149206310369939.
Schoenberg, R., & Schoenberg, S. (2006). Thirty Years of Mergers and Acquisitions Research: Recent Advances and Future Opportunities. British Journal of Management, 17(1), s1-s5. doi:10.1111/j.1467-8551.2006.00475.x..