An Analysis of Business Merger and Acquisition and Their Impact on Business Profitability (a Case Study of Access Bank Plc)
CHAPTER ONE
PURPOSE OF THE STUDY
For any of a large number of reasons, merger and acquisition cannot take a back seat in this view of economic resolution that is sweeping across the financial sector and seal section of the economy
- To examine the impact of merger and acquisition on organizational profitability.
- To establish the effect of merger and acquisition on individual employee performance.
- To examine the impact of merger and acquisition on economic development.
CHAPTER TWO
THE LITERATURE REVIEW
INTRODUCTION
Since every organization is embedded in a complex environment. Those who formulate policy for the organizations should be aware of the existence and impact of the various operating environmental challenges.
The key to an organizations success is the ability to make to timely and appropriate adoption to the complex and changing environment.
In defining or re-defining a company mission, strategic managers mostly recognizes and acknowledges the dynamism of operating environment in which such company will operate. These various changes that the operating environment experiences from time to time create uncertainty and risk and also create opportunities for management to exploit the situation for profit objective or whatever their criterion of success
Adeleke (1993) in his book, business policy and strategy opinions that ** enterprises environment is the totality of force and institution that are external and potentially relevant to the firm, a major fact about the environment is that it does not survive. An organization performance in environment is matter of the degree alignment between the organization environmental opportunities objectives, policy, strategy structures and management styles and systems.
Merger is one of the methods to achieve or to prepare consolidated accounts. The assets of two or more business are amalgamated to provide the group accounts. It is intend for use where the companies have joined together and the shareholders of both companies retain their interest in what is really a joint venture while acquisition as another method could be used to prepare a consolidated accounts.
The holding company effectively take over controls the subsidiary. In such case there will be shareholders in the subsidiary who have no interest in the affairs of the holding company and monitoring interest in the subsidiary requires additional consideration when preparing the group accounts. Both methods are available for preparing group accounts but the most common approach in the United Kingdom is the use of the acquisition method (MC Namara 1990).
The international Accounting standard (TAS) defined business combination as the result of the acquiring of control of one or more enterprises by another enterprises or the uniting of interest of two or more enterprises.
Statement of Standard Accounting Practice (SSAP 23) did not explicit define either a merger or an acquisition, but the accounting standard committee on exposure draft (ED) on propose revision of the current (SSAP 23) in their own view defined acquisition at the application of resources to obtain ownership or control of another enterprises for the mutual sharing of the risk and reward of the combined enterprises where no party of the combination can be identified as acquiring or acquire.
Moreover, Rutterman (1987) sees merger as a situation where companies agree to pool their interest by an exchange of shares, so that the existing shareholder come together under one entity. While acquisition is the situation where a company acquire and controlling interest to greater than or equal to 50% or ordinary share is another company thereby giving the acquisition company the power to have great influence in the management and policy formulation of the acquired company. Similarly, feyitimi (1991) defined merger as a situation where two ore more separate entities agree to less their individual legal entities and come under one umbrella entity by pooling their management material and labour resources together so as to entry economic benefit while Anounbi (1992), given has opinion that manager is just a combination of two firm(s) another definition by Akamiokor (2003), in his paper” merger and acquisition as including “all business and corporate organization and operational devices and arrangement by which the ownership and management of independently operated properties and business and brought under the control of a single management “ In an acquisition, the acquiring company is usually in administrative convenience and may not be engaged in any operational activities and the acquired companies becomes its subsidiaries (e.g U.A.C Ltd and its subsidiaries) the holding companies becomes merely becomes the beneficially owners of all or a substantial part of the share in the subsidiaries while the main shareholder of the groups will only have the interest in the holding Company’s most often than not.
CHAPTER THREE
RESEARCH METHODOLOGY
The purpose of this research study is to systematic the fact that merger and acquisition has positive impact on organization profitability.
To further ascertain this intercontinental bank plc will be used a point of reference. All these will be with the aim of finding and recommending a strategic managerial tool for organization profitability.
Therefore, this chapter with the method procedure to be used in conductivity the research of investigation used in conductivity the method investigation used to the method this is by means of questionnaire and press released data as touching the ‘corporate marriage’ among intercontinental bank plc, global banks, gateway banks and Equality bank as well as the scheme of merger document
CHAPTER FOUR
DATA PRESENTATION
INTRODUCTION
In the chapter the data collected for the study through the use of questionnaire is presented and analyzed for each of the question in the questionnaire the raw scores of the response are converted into percentage presented in table and finally analyzed.
The analysis of the demographic data of the respondents under section. A was carried out first then followed by the analysis of that question related to the research subject matter
CHAPTER FIVE
SUMMARY, CONCLUSION, AND RECOMMENDATIONS
SUMMARY
From the review of the available literature on merger acquisition as regard the merged and acquired banks, and the proceed analysis of the data collected from the bank, newspaper and in magazine as well as the field survey carried out the following summary become imperative.
That the problem which the study has attempt to solve is to reveal the impact of merger and acquisition on some merged and acquired banks i.e. intercontinental bank plc that merged with three bank which are equity bank plc , gateway bank plc and global bank plc. The objective of the study was establish through empirical investigation of the impact of merger and acquisition the necessary research question and hypothesis were formulated on the basis of each of the objective of the study other sub-heading discussed in chapter one include significance of study scope and purpose of study important literature were review in chapter two of the research work on the meaning, type, benefit and efficacy of the merger and acquisition
Chapter three of the research report look into the methodology of the study and the following sub-heading were discussed full; research design, among others.
The data generated through the use of questionnaire were analyzed in chapter four in the analysis simple statistical tool were used like table and percentage. The hypothesis were test and inference draw finally, the fact that these sector have been employing growth development and corporate productivity is perhaps most ritual element of efficiency and effectiveness of a grand optimal merger and acquisition, this new face of the banks in the mind of the market with an extended product lines and comprehensive and state -art information technology. From this point of view therefore, the expectation is that the emergence of the new banks in the financial sector is bound to have catalyst impact on necessary would put the bank on a corporate productivity.
CONCLUSION
Judging from the various receiving, analysis and findings the result revealed some facts from which the researcher then draws certain conclusion.
With various position responses to the finding, one would easily infer that the scheme of merger that bought about the’ corporate marriage” between the banks is with the aim of strategically position them for long- term superior financial performance.
The enlarged intercontinental bank Plc well transforms into a mega bank that is capable of playing in a global area and handing big ticket transactions which hither to be the exclusive preserve of overseas banks. Drawn from the analysis of finding carried out are the possible and enhanced operating synergies. Based on the premises that produce this fact, the merger and acquisition between banks would bring about more efficient and effective universal banking operation than each bank on its own (without merger).
The resulted operating synergies from the merger and acquisition will generate higher gross income, reduction in interest expenses. Enhanced credit management and other benefits made possible by combining complement and operations.
Since the emerged banks are national corporate citizen, the effect of the merger and acquisition cannot but benefit on the banks social responsibility. The banks well here after carry out their social responsibility in the economy. The assessments of environmental impact i.e economic, political social or technological changes are the genesis of all managerial actions and functions.
The assessment of these environmental challenges should be accurate and complete in order to decide on the opportunities and minimize of not totally eliminate threats on the challenges.
In the face of this unexpected challenge’s from the operating environment, a company cannot afford to adopt do nothing strategy but merger and acquisition have proved and tested as a reliable grand strategy option for corporate productivity. Although the approach is considered by some concerned quarters that it may hinder competitive challenge and there after breeds monopoly.
RECOMMENDATION
Base on the findings of the study, it is essential to give recommendation in order to reap more gain from merger and acquisition:
- It recommended that management should install discipline upon itself by ensuring good cooperate governance, promote technological process and increase it paid-up capital regardless of the statutory requirement so that continued existence of the firm is not jeopardize after undergoing merger and acquisition.
- Management should not only undertake merger and acquisition in order to improve operations and sustain falling business also to improve their competitiveness and financial standing.
- Management should come-up with sound strategies towards asset and liabilities so as to avert the problems of mismatching investment and also the quality of asset should be enhanced.
- Management should put into consideration the degree of transfer-ability and marketability of asset invested in, so that this asset can provide liquidity to the firm with the ease.
REFERENCES
- Bausch, Ronald. “WSJ M HYPERLINK “http://blogs.wsj.com/deals/2010/11/09/wsj-ma-101-a-guide-to-merger-agreements/”& HYPERLINK “http://blogs.wsj.com/deals/2010/11/09/wsj-ma-101-a-guide-to-merger-agreements/”A 101: A Guide to Merger Agreements”. WSJ Deal Journal. Retrieved 19.
- Derek van der Platt (9 September 2013). Private Company Mergers and Acquisitions. Retrieved 18 February 2015.
- Davis Mall & D’Agostine, P.C. Retrieved 19 August 2013.
- Hansel, Gerry; Kengelbach, Jens; Walker, Decker. “Lessons from Successful Serial Acquirers”.
- Transaction Advisors. ISSN 2329-9134.
- “Mergers HYPERLINK “http://www.mckennalong.com/media/site_files/1634_MLA%20M_A%20Quick%20Reference%20Guide.pdf”& HYPERLINK “http://www.mckennalong.com/media/site_files/1634_MLA%20M_A%20Quick%20Reference%20Guide.pdf” Acquisitions Quick Reference Guide” (PDF). McKenna Long & Aldridge LLP.
- Retrieved 19 August 2013.
- Rumyantseva, Maria, Gregory Gurgle, and Ellen Henkle. “Knowledge Integration After Mergers
- & Acquisitions.” University of Mississippi Business Department. University of Mississippi, July 2002.
