Management for Professionals

The Springer series Management for Professionals comprises high-level business and management books for executives. The authors are experienced business professionals and renowned professors who combine scientific background, best practice, and entrepreneurial vision to provide powerful insights into how to achieve business excellence.

Maximilian Dreher and Dietmar Ernst

Mergers & Acquisitions

Understanding M&A Processes for Large- and Medium-Sized Companies

Maximilian Dreher

MBG Mid-Market Investment Company Baden-Württemberg, Stuttgart, Germany

Dietmar Ernst

University of Nürtingen-Geislingen (HfWU), Nürtingen, Germany

ISSN 2192-8096e-ISSN 2192-810X

Management for Professionals

ISBN 978-3-030-99841-7e-ISBN 978-3-030-99842-4

https://doi.org/10.1007/978-3-030-99842-4

This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed.

The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use.

The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

This Springer imprint is published by the registered company Springer Nature Switzerland AG

The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Preface

In view of increasing globalization and the associated internationalization of markets, companies of all sizes are facing growing competition. Opening of new markets, such as Asia, South America, or Eastern Europe, dismantling of traditional barriers to market entry, and saturation of domestic markets are pushing companies to take the initiative. It is not the big that eats the small, but the fast that eats the slow (Furtner, 2011, p. 20).

Nowadays, mergers and acquisitions (M&A) are an essential instrument of strategic corporate management for various companies. The credo is to grow faster and stronger than the competition thanks to inorganic growth. The phenomenon is making M&A not only a part of the standard repertoire of corporate executives but is also becoming increasingly important in the minds of medium-sized companies. What has been initially an exclusive country club for large-scale entrepreneurs, has long since been identified by decision-makers in the SME sector as an important growth element. Those who see M&A merely as a spare-time activity and not as a duty, miss the significance of this instrument with this assessment.

Company mergers and acquisitions are highly complex and time-consuming projects initiated, for example, by growth desires, restructuring, or succession planning. Due to numerous endogenous and exogenous influences, no two M&A transactions are alike at the detailed level. Although there is no patent remedy to follow in connection with a merger or acquisition, orientation to established process milestones helps those involved in the transaction to significantly increase the chances of success.

Despite the increasing importance of M&A transactions, around 56% of all mergers and acquisitions turn out to be failures (Wirtz, 2012, p. 7). “Therefore, test who binds himself eternally, whether the heart finds its way to another heart! The delusion is short, the regret is long,” reads Friedrich Schiller’s poem “The Song of the Bell” (1799), in which he warned against blind euphoria when choosing a spouse. Many corporate leaders do not seem to realize that these wise words apply not only to the marriage of two people. In 1998, for example, the merger of Daimler-Benz AG with Chrysler Corporation was initially celebrated as a historic event. However, after 2 years this marriage was already in crisis and in 2007 the divorce was finally executed. The case of Daimler-Chrysler is one of many failed corporate transactions. However, such wrong decisions are not only made in large companies, but also in medium-sized businesses. In medium-sized companies, however, the failure of corporate transactions can be existentially threatening.

The success of an M&A project depends to a large extent on optimal transaction preparation, fast transaction execution and the experience of the parties involved. Anyone who ventures into a transaction unprepared and fails to recognize the momentum will have to pay dearly for this later. The process must therefore be carefully prepared and executed by both buyer and seller.

“In the end, we retain from our studies only what we can practically apply.” In accordance with this quotation from Johann Wolfgang von Goethe, this book is designed as a practical M&A guide. In addition to dealing with important fundamentals regarding Mergers and Acquisitions, the main focus is on a structured and well-founded examination of the individual process steps of a typical sale of a company. In the process, specific differences between the sale of medium-sized companies (mid-caps), and large-sized companies (large-caps) are discussed.

It should also be highlighted that M&A is part of the tools of the trade for both large- and medium-sized companies, and both groups should take “(…) M&A as a weapon for competitive advantage” (Harding et al., 2013, p. 8).

We would like to thank the publisher Springer Nature for tackling this exciting topic together with us. Miss Rocio Torregrosa and Mister Parthiban Gujilan Kannan from Springer Nature has supported us professionally in all steps of the book production, for which we thank her/him very much. If you have any questions, suggestions, criticism (and praise, too), please feel free to contact us at info@dicf.de.

We wish all readers an interesting and insightful read.