Investigation Into Mergers and Acquisitions of the American Banking Sector, Dissertation – Results Example
Words: 2940Dissertation - Results
Background of Topic Case
The 2008 financial crisis has brought the American economy into different lights of possibilities. The closures and the misguided financial decisions in the past have already seen its value when the economic commotion finally occurred. What happened was that the financial institutions needed to create possibilities and embrace different options of re-growing and re-establishing their position in the face of worldwide economic turmoil (Denison, et al, 2012). It was a hard hitting truth for large financial entities to see their assets losing their power in the idea of controlling the situation, particularly in making sure that their organization or business is intact all throughout the process of development that the banking industries have taken into close consideration.
The emergence of mergers and acquisitions between organizations during this time basically played a great role on how business assets were saved and how new partner organizations were welcomed into the system making them [supposedly] more powerful and more established in nature especially in facing the challenges that are to come along the way alongside the point of survival in the middle of such emerging crisis (Aharon, et al, 2010). In 2008, historical record shows how the top-performers in the financial industry suffered so much that some of them had to foreclose immediately. Others, however, tried different options in order to conceal themselves from being completed destructed and destroyed by the situation. How so? Merger and acquisition arrangements provided them with such point of safety.
The case between the ‘marriage’ between the Bank of America and Merrill Lynch financial institution was one particular example of the (Cartwright et al, 2006) . BofA was somewhat given the outright position to deal with the situation. Being the largest institution holding the highest rate of reserves, BofA stood as a means of safety for most businesses and other financial institutions during the time. However, because of the limited funding that is released by the government from the federal reserves, BofA administrators needed to make sure that they are able to create a more distinct point of decision-making culture that would allow them to see the value of their assets and how these elemental factors are to be used to save particularly key performing institutions in the industry. To note, in relation to the topic being presented in this research, this case presentation shall try to analyze the different points of insistence that indicates the reality behind the emergent creation of connection between factors that make up the industry of financial exchange and security; matters that created a definite decision on whether or not particular business institutions ought to be saved and be given another chance to thrive throughout the emerging effects of the financial crisis on the primary operations embraced by the organization.
The Nature of Merger and Acquisition before the Crisis
Considered as an elemental factor playing a great role in business strategic management, merger acquisition naturally involves the selling, buying, or the division and combination of separate existing companies that are currently seeing the value of working together towards institutional success due to particular occurrences in the market that might have jeopardized their position in relation to the developmental competition that they are engaged with.
Growth and positive development are two primary elements of improvement that business entities would like to engage in (Bartran, et al, 2013). Every institution in the market would of course want to embrace the possibility of expanding their operations in the industry they are included with. Necessarily, some organizations and institutions see the need to find partners that would aid them into realizing such goal further. What makes this move rather constructive is the fact that the capital-assets of these two or more organizations are to be mixed together in order to make a relative degree of impact on each other. Instead of establishing a parasitic relationship between these institutions, merger acquisitions entail to provide a mutual process of exchange of value between organizations. This then means that before the agreements are done, long periods of deliberation are considered in order for proper decisions to be made.
Most of the time, the capacity of the organization to strengthen the other institution to which it hopes to establish partnership with is measured accordingly before the decisions are made. Partnerships ought to be mutual in nature and balanced in relation the exchange of values between the organizations involved. It is necessary to make sure that the connection between these industries are established accordingly and are written out in paper, deliberated within a particular span of time (DePamphilis, et al, 2008). However, during the financial economic turmoil that affected the whole world, it could be noticed how such culture in merger acquisition have changed accordingly in order to support the needs of the organizations requiring the help from peer-institutions as well as other assisting organizations that are directed towards providing a more distinct sense of budget-support that the businesses are likely to be assisted with.
- The primary cultures that changed in this process include the following:
- Time constrained decision-making pushed for faster procedures of capacity-measurement and assessment approaches
Due to the need of saving the institutions at a much faster pace, administrators of institutions that are to engage in merger-acquisition agreements are compromised to consider fast-paced approaches in presenting their case’s basic points in order to convince their target partners into the agreement and make them more amicable to the terms that have been created to meet with the values highly given attention to by the other organization.
As of this time, because of the emergence of financial crisis, the points of consideration are most likely directed towards upraising the value of the current financial assets of the business; this allows the target partner to see the real value of such consideration especially in relation to aiding the company with the stability it has to incur (Douma, et al, 2013).
Instead of growth and expansion, the goal of these acquisitions is most likely dedicated to the consideration over the need to stabilize the position of the organization. Hence, to make sure that the organization gets the attention of the partner being desired to be given attention to, the business aiming to be absorbed by another needs to point out that it can offer something more to the organization in the future in exchange for the financial support it seeks to get from the business it hopes to connect with. Practically, large entities aiming for such attention might need to lower down its point of business pride and accept the fact that it does need to readjust to the major values and motives of the other organization to which it hopes to form an engagement with (Fleuriet, 2008). This might mean immediately lowering down their points of goal development which ought to be specifically catered towards the hardships and particular issues of vulnerabilities that the business may be specifically concerned with. Resolving such issues and the plans for recovery that the organization hopes to incur and how they are likely to incur such point of development should be clearly pointed out in the written form of proposed agreements that are to be valued in the merger-acquisition point of decision-making.
- Bidding and arguments are considered as an important part of the proceedings.
Basing from the case of BofA and Merrill-Lynch acquisition agreements, it could be understood that the creation of connection and agreement does mandate a better sense of improving how the current values of the organization ought to be submitted for scrutiny by the providing a concrete presentation on the plan of the agreeing organization to make sure that the budget to be provided to them as part of the merging would be well used depending on the presented plan especially when it comes to making a definite insistence on growth and development; one that basically gives them a better sense of value among themselves as well as to how they would be able to give back the value required to return the supposed point of investment that the organization needs from the supporting institution.
- Compromising values is often defined to be one of the primary components that organizations need to go through especially when it comes to competing with other organizations that need to gain the attention of the primary institution providing the support needed
Compromise is a vital part of the agreement. This often occurs because of the time constraint; given that there are other organizations wanting the attention and assistance of the partner organization being targeted, the organizations aiming for attention and consideration need to make particular compromises often involving the values they give high concern for. Bargaining stock values’ point of exchange often create a more definitive path of growth and development for the organizations involved (Harwood, 2006). Nonetheless, organizations offering such plan of merging and acquisition need to be cautious enough, trying to see and understand the future value of their current decisions.
It should be realized by organizations that as they engage in merger-acquisition agreements, they should still have the capacity to protect the recognition that they have established for the time that they have existed in the market. Noticeably, such capacity could be measured and planned for especially for the sake of regaining power and strength in the future as a working partner that serves as a good asset for the institution that absorbs the said organization into its operation.
What makes modern merger acquisition culture distinctive especially in recognition of the financial turmoil that has caused massive changes and pressures on established organizations is that of the consideration and focus it has towards the most constructive process of survival (Harwood, 2006). This point of survival is an elemental factor by which businesses are dedicated towards making a massive point of transformation that would not only assist them in surviving the current situation but would also prolong their new-found stability with a partner in order to make sure that their limited assets are protected fully while it is to be used to support the need for growth that the organization needs to embrace accordingly.
As observed from the merger-acquisition that occurred between BofA and Merrill-Lynch financial institution, the administrators of Merrill-Lynch became more concerned about how they are going to make sure that even though they are coming into a business engagement with BofA , they would not be stepped on too much and that their values would be recognized accordingly by the new partner. The compromises were analyzed and found to have been strongly examined within a few days and long grueling hours. It was certain that the organization needed immediate response from BofA and the administrators of the targeted partner need to make immediate decisions on whether or not accept what the financial institution has to offer them with. The rate of exchange of values had to be practically understood and engaged with; relatively, this allows both organization to seek to find the ways by which their values are to be protected within the agreement and that their financial assets would be managed accordingly in order to assume a more extensive process by which business developments are fully accounted for in the process of reestablishing the company’s name and reputation in the face of such financial turmoil.
Risk is a definite part of the process. Noticeably, when one engages in business with other entity, it is evident how some points of considerations are to be given up and how some others ought to be protected fully (Douma, et al, 2013). A forecast of the future values-treatment need to be given particular concern especially in making a certain impact on the future plans that the business would have especially on the business-cultural transformation that they are to take into account once the acquisition is made and completed. For the merger-acquisition between BofA and Merrill-Lynch, the agreement was completed and announced on September 15, 2008. This connection was actually assumed to have a great impact on how the financial institution was rather to take on a new point of improvement and adjustments that are to make a mark on how they used to complete transactions and close deals as an individual party and now should be able to handle the situation as part of an agreed partnership.
Merrill-Lynch specifically took into account the risks and has realized how much the merger-acquisition would primarily hurt the business’ primary operation at present. Nevertheless, the consideration over such matter is given full attention to especially in relation to its connection with the future hopes of the business as it operates with BofA towards the end of the financial crisis that both organizations have to face at present. The risks are accepted accordingly as they are expected to be the foundation of a much better sense of development in the future especially for the reestablishment of the organization in line with the considerations made in relation to what is meant by good business engagements.
The fact that there is a current financial pressure that was occurring in the world’s economic system, the business knew that when it comes to engaging in partnership with another organization, some risks are bound to occur and these matters should be considered as part of the process. Merger-acquisitions in the middle of worldwide financial pressure would of course create a more distinct sense of sacrifice on the part of the businesses that are at the losing end in the first place. Merrill-Lynch administrators knew that they had to take on the challenge, to become more effective in the agreement, they had to know how to deal with such point of sacrifices at present and become more effective in determining how to mandate management of assets later on and be more concerned on how a good essence of development could be embraced later on in order to make sure that the need of the organization for growth would be catered to later on when the financial problems have already been controlled (DePamphilis, 2008).
This chapter imposes that the connection and consideration over the partnership between BofA and Merrill-Lynch was seen to have been considered problematic at first. Nevertheless, the measuring of values and the consideration over the reality of the situation is rather an important part of the process. Merrill-Lynch needed to make sure that their point of development would need to undergo a particular aspect of failure especially that they are undergoing a specific failure and loses because of the emergent existence of financial crisis that happened in the said era of world economic adjustments and transformations. The acceptance of such occurrence and the realization of the value of development that the business wants to incur in the future have been regulated according to the current situation of the economic systems. Noticeably, through measuring the pros and cons of the agreement, both BofA and Merrill-Lynch came to an agreement that most banks and financial institutions in the United States follow through at present. The desire to make a mark on how they develop a more defined insistence on how they manage their business operations, both organizations are expected to take on a good sense of the benefit of their partnership later on.
As seen from the discussion pointed out in this chapter, there are different issues that are considered in making a distinct sense of development especially in considering the value of monetary assets in relation to the current financial situations that are existing in the world’s current economic trend. What makes such option of development effective is the fact that it is able to make a mark on how the business itself improves in the middle of financial turmoil. Most likely, the connection between BofA and Merrill-Lynch is one thing that proves how risks and sacrifices are but a part of the beginning of a good business partnership. The realization of Merrill-Lynch of the position that it has incurred because of the monetary turmoil gave it a better sense of what it has to give way to and what changes it has to embrace especially in the hope of making a distinct impact on how a more improved process of business operations could be considered accordingly.
Practically, this case presents how the 2008 financial crisis actually created a new sense of recognition on how business mergers and acquisitions have been modified accordingly to fit the needs of modern businesses undergoing particular issues in their financial assets and how these elements are used to make sure that these considerations yield the most purposeful results for the business and its partners.
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