M&A Needn’t be a Loser’s Game Mergers and acquisitions are a function of corporate finance which deals with the purchasing, selling, division and combination of different entities in order to in-organically grow a company. Mergers & acquisitions (M&A) occur when a company desires growth without the capability or ability to do so on its own. Many companies use this method of growth in order to improve their own financial performance which can be lacking due to increasing economies of scale, decreased revenue, decreased market share or even increased taxation. As common in marketplace as M&A is, not many firms have been successful in this venture, which is mainly due to the misunderstanding of three major concepts; the Pareto principle, customer centric purchasing and overestimation of returns. The article highlighted three different concepts that many companies overlook when going through the process of mergers and acquisitions. The first concept deals with the Pareto principle, or in most cases commonly known as the 80-20 rule. The Pareto principle states that roughly 80% of the effects come from 20% of the cases and in finance this translates to 80% of the profits come from only 20% of the their customers. In order to successfully complete an M&A the purchaser has to understand that “a small group of customers typically accounts for all of a company’s market capitalization, while another group reduces that value significantly (pg. 72).” If the purchaser main concern is to gain profit from the deal without fully analyzing the company and without any insight as to where the bulk of the revenue is generated from they can misinterpret the information and ultimately make the wrong choice and purchase a bad investment. Without understanding the economic value of these different segments of customers the purchaser will not understand that the company’s value is reflected almost entirely due to the aggregate value of their customers. This targeted customer value is important for a purchaser to be aware of but it can also be a pitfall if the company acquisition plan is entirely customer centric. Many “companies buy companies for many reasons, but the most common is to acquire customers (pg. 75).” Merely increasing the number of customers a company has visibility to will not guarantee that they will become more profitable. Focusing on the purchase of quantity of customers and not quality of customers leads to corporate ignorance and what is commonly seen on the market today, failed mergers and acquisitions. However if a company is able to increase their customers while understanding and locating the most profitable ones they can come out of the deal successfully. This is a concept that my current workplace employs when pursing new companies to acquire. Most of the companies we seek to acquire have a different customer base than what our company currently reaches. Purchasing these new companies not only increases our market share but entitles us to enter new industries we alone could not successfully undertake. However, though we are gaining additional customers substantial analysis is completed to guarantee there is no overlap or duplication of duties between our current sales and marketing company and the company we are currently in the works of purchasing. In addition a massive amount of work is done to ensure that the customer base we are undertaking is not only profitable but has the ability to grow. Therefore increasing customers is an important goal but it is not the only goal. Another important concept that is commonly misunderstood is the overestimation of returns. Many companies that have experienced a significant amount of loss for a considerable amount of time believe that if they purchase a rapidly growing company within the same industry they can leverage that into cost savings or increased revenue. This outlook however could not be more incorrect. Take for example the case of The Learning…
president of international contracts, Jonathan Stein. The fact that other contractors in other countries are complying with the guidelines and performing just fine, while other countries are renegading and doing their own thing is a big issue for T&T. Lack of communication seems to be a major problem for a company that is choosing to outsource certain business sectors to various parts of the world outside of their main markets, US and Europe.
Another issue arises when companies from the United…
right for you? Nutrisystem, Weight Watchers 360, Slim Fast, Jenny Craig, South Beach Diet, and The Biggest Loser Diet are just the beginning of the diets that people see in commercials everyday. But lets just look at the top three commercial diets in the United States. According to U.S News- Best Diets ranking, number 1 is Weight Watchers 360, Number 2 is Jenny Craig and Number 3 is The Biggest Loser Diet.
Weight Watchers is currently the number one diet in America. Weight Watchers a simple, engaging…
Violent Video Games
on Presence and Aggression
Wake Forest University
Winston-Salem, NC 27106
Kirstie M. Farrar
University of Connecticut
Storrs, CT 06269
The level of presence is likely to inﬂuence the effect of media violence. This project
examines the causes and consequences of presence in the context of violent video
game play. In a between subjects design, 227 participants were randomly assigned
to play either a violent or a nonviolent video game. The results…
Winner or Loser?
FYS-102-DL2A: First Year Seminar
Adjunct Professor Camille A. Kramer
March 16, 2017
“The Lottery” is a short story written by Shirley Jackson. It was first published in “The New Yorker” in 1948. The morbid subject matter caused much controversy, but is considered to be her most famous work. In this paper, I examine the irony of the story. The word lottery typically means you’ve won something good, or of value, however here…
parents and family seem to love him and he can always go to them if he needs to speak to anyone and this is good for his emotional needs. Also he has everything that a young child needs, such a computer, books, games and toys which all of this can help with his intellectual needs. But Andy has had a computer since he was three which is a good and bad thing, one being a good thing as it can help him with his intellectual needs such as learning new things but the bad thing is that it can affect his…
Assignment question: Outline who are the winners and losers in a consumer society.
‘Outline’ – my understanding of this is to summarise/define the winners and losers in a consumer society, focussing on identifying who they are and not why they are.
Describe what I am going to do – keep it short and refer to the question that is being asked, I could start by pointing out who are the winners and losers in general and then building on them in the following paragraphs in…
dividing society to some extent. However it is not just income that affects people’s ability to consume effectively. Factors like age, mobility and ethical choices may also lead to exclusion. The following text will look at the main winners and losers in a society so driven by consumption.
Zygmunt Bauman (1988) notes how a consumer society is open to many people, with those in secure employment and access to cheap credit able to buy into the offerings of such a society, whereas it was only the…
Katherine Mansfield's "Life of Ma Parker": Women's Plight Katherine Mansfield's "Life of Ma Parker" presents the plight of Ma Parker as a working-class woman at the turn of the century, in terms of her position in the sphere of the family and in the sphere of society. "Life of Ma Parker" is a story of a widowed charwoman. Like Miss Brill, Ma Parker is a very lonely woman, but their equally painful story is told quite differently, mainly because Mansfield supplies no…
What Would Happen if the New T-shirt Market Operated as a Free Market?
The producers in the new T-shirt value chain do not operate in a free market system. Government protectionist measures such as subsidies, quotas, and tariffs have limited economic success to a fortunate few. According to the author Pietra Rivoli, “the winners at various stages of my T-shirt’s life are adept not so much at competing in markets but at avoiding them.” These winners include the U.S. cotton farmer and the China…