Accounting And Finance Dissertation Conclusion Sample 6

The aim of the research was to propose a framework that can be adopted on banking and public sectors to support and manage the decision regarding merging in strategic context. To manage the achievement of aims a number of objectives were set, the accomplishment of which would support achievement of the aim. Following table summarises how each of the objectives were achieved in different chapters. 

Objective 1: To examine and evaluate comprehensively the decisions regards merging in the area of managing merges, strategy behind merging, challenges, and barriers.

In this regard the research found that the strategy must consider the drivers, risks and benefits. The research found that main drivers for M&A include, synergies, growth and diversification, and economies of scale for cost efficiency (section 5.3.8). This research focused on synergies as driver of M&A and found that synergies can be achieved through economies of scope, by producing more, with the same resources, through the efficient use of those that were available. In case of diversification as driver of M&A, this study found that diversification refers to the decision of a company to leave its main markets, lines of business, and geographic and products, to enter other. The faster the rate of income, the higher the rate of return, and the higher the value generated from the transaction. 

The results showed that various benefits are obtained from M&A activities which include diversification, strategic realignment, economies of scale, increase in market power (section

5.4.1). This study concludes that strategic realignment is an important aspect. Business environments have rapid changes in many aspects, but technological and legal aspects are particularly important. Furthermore, this study identified that risks are also important strategic issue of M&. The results showed that the main risks identified by research participants are conflicts between merging workforce leading to demotivation and disappointment causing loss of human resources (section 5.4.2).  A much comprehensive list of risks associated with M&A activities were found through secondary research and the study found that less than half of the mergers are successful in accordance with the opinions of shareholders, customers and employees, the three groups to which the author gives greater value.  

The results found that main barriers and challenges faced by the M&A activities in banking industry include lack of communication, employee retention and cultural challenges as some of the major factors (see section 5.4.4). The empirical investigation showed that conflict of interest between merging parties is particularly important. It often combines with lack of agreement between merging parties and becomes a significant threat to merger success. As per the results reported in section 5.4.5 the main success factors identified by the banking sectors employees include trust between managements of merging organisations, resistance towards the change, and experience with previous mergers. Due diligence has also been identified as one of the most important factor.

The study also emphasised failure factors, as reported in the results in section 5.4.6 which showed that main failure factors include lack of involvement of the owners, ambiguity or lack of clarity, difference between theoretical and practical valuation, issues of cultural integration and errors of negotiation errors. The study also concludes that these factors can be considered as the other side of the coin of critical success factors. Majority of the factors are caused by lack of integration in way or another.

Objective 2: To identify supporting theories for building a conceptual framework.

The section 6.5 provides a detailed description of theories that were explored to develop the conceptual framework. The framework has been arranged in various blocks. These blocks consist of important factors that affect M&A process and its outcomes. The study conducted a detailed investigation for each factor of the framework and provided supporting evidence. The foremost block in the framework is key attributes of M&A. The key attributes of M&A consist of seven sub-factors, namely, strategic actions, drivers, barriers and challenges, benefits, risks, and critical success factor.

The main key attribute is the drivers, among which the most important is value creation. The ultimate purpose of M&A transaction is to gain financial benefits for the firm and provide value to its stakeholders. The results and discussion in section 6.2.1 indicate that value creation through M&A are based on the synergies, diversification and growth, and economies of scale achieved through union of two organisations.

Objective 3: To investigate empirically the influential factors that can support the decisions regards merging in banking organizations.

The framework developed provides and summarises all the factors in M&A transactions. There are seven main features of M&A, namely, drivers, strategic actions, challenges and barriers, risks, benefits, and critical success and failure factors. This study concludes that M&A between financial institutions represent significant opportunities and risks, both for the entities involved and for the financial system worldwide. 

The benefits of M&A are important attribute. Financial institutions proceeds with M&A transactions if the management predicts that all stakeholders benefit from M&A for both organisations. Various benefits were identified from the empirical evidence gathered in this study. These include strategic realignment, diversification, increase in market power, and economies of scale. This study also concludes that these results are consistent with past studies. The secondary research revealed that fast paced changes in the commercial environment require the businesses to manage changes which include technological changes and realign the business in the market. The strategic realignment of the firm provides new lucrative opportunities for business. 

Furthermore, the study concludes that risks of M&A should be included in the strategic framework. The results of interviews conflicts between merging workforce cause disappointment and demotivation in the human resources and loss of talent and experienced employees. It can be concluded that if there is conflict of interest, there is an increase in the uncertainty and anxiety among employees which in turn leads to high turnover. The study also found similar evidence regarding factors that can be categorised as barriers and challenges. The study concludes that main barriers or challenges in M&A transactions include lack of communication, cultural challenges and employee retention. 

The study also found that critical success factors must be identified in the M&A strategic framework. The interview results in this study showed that the main critical success factors are due diligence, financial integration, strategic product-market integration, cultural integration, and operational integration. Lastly, this study found that failure factors are also key attributes of M&A framework as they cause hindrances in the implementation and execution of M&A and therefore hinder the accomplishment of M&A aims and objectives. Within this context, this study found that that failure factors in the strategic framework should focus on low involvement of the owners or lack thereof, gap between expected and real valuation, ambiguity and uncertainty, issues of cultural integration and negotiation errors. 

In the second block of the strategic framework there are M&A process stages, that are classified as pre-M&A, during M&A and post M&A. This study indicates that a number of pre-M&A activities also called the good practices can be useful to achieve critical success factors in the framework. The main sub-factor in the pre-phase is strategic planning. It refers to strategic actions of the managers. It was observed that the initial activity in M&A strategies is the preparation of due diligence reports. The diligence report results help the higher management to justify their strategy and plans for M&A and coordinate with all stakeholders to demonstrate its benefits and to encourage them for active involvement. Furthermore, the study concludes that that communication of benefits, objectives, and roles of each stakeholders, during the M&A process implementation should be counted as a good practice and therefore it is an essential element in the strategic framework. Furthermore, the study concludes that communication should considered a high priority practice to ensure that leaders of M&A must communicate with all stakeholders such as firms’ employees and justify them about the rationale and advantages of M&A decision. In addition, another pre-M&A practice is preserving value of existing assets of the firm. Finally the most important factor for the pre-implementation phase is the technological review of both firms as per the interview results. These results have support from past literature because many researchers such as conducting due diligence analysis before implementation of

M&A.

This study also concludes that within the case of practices during M&A phase, communication and interaction at all levels of the two firms are critical. The study also found importance of governance framework for M&A process to manage the behaviour and prevent rash and risky decisions. Along with evidence from interviews conducted in this study, the researcher also found significant level of support from past studies. The study concludes that good practices for post-M&A practices include realisation of value amongst firms, reassessments of assets, the transition of operations and departments, vision and mission statement revision, and progress monitoring system must be counted as good practices in M&A development framework. 

The study also found the impact and importance of the external factors, internal factors, and change management that are relevant in all phases of the M&A implementation. This study concludes that numerous internal factors of firms affect M&A process such as synergies in terms of culture, operations, product and market synergies, and effective communication media and methods. For external factors this study concludes that firms must prioritise legal compliance and gain support all stakeholders to achieve critical success factors identified iun the framework. The importance of change management has been highlighted by this study which is also consistent with all past studies reviewed during secondary research phase.