An Analysis of Chinese acquisitions of Made in Italy firms in the luxury sector

Outward Foreign Direct Investment (OFDI) from emerging economies has begun to increase significantly and has been growing at a faster pace than Foreign Direct Investment (FDI) from the developed world. This research seeks to assess the impact of Chinese acquisitions and their implications for the “Made in Italy” luxury sector and its firms. This paper presents a cross-case analysis of two Chinese acquisitions in order to provide some in-depth insights into the influences and the motives driving Chinese firms to invest in the luxury Made in Italy sector, the patterns and modes of the Chinese acquisitions as well as the competitive strategies and the distinctive challenges that both investors and acquired firms have to face. From the findings, it emerges that both the investor and the acquired firm need to overcome several key challenges to be mutual benefits from the acquisition

Mergers and acquisitions transactions strategies in diffusion - type financial systems in highly volatile global capital markets with nonlinearities

The M and A transactions represent a wide range of unique business optimization opportunities in the corporate transformation deals, which are usually characterized by the high level of total risk. The M and A transactions can be successfully implemented by taking to an account the size of investments, purchase price, direction of transaction, type of transaction, and using the modern comparable transactions analysis and the business valuation techniques in the diffusion type financial systems in the finances. We developed the MicroMA software program with the embedded optimized near-real-time artificial intelligence algorithm to create the winning virtuous M and A strategies, using the financial performance characteristics of the involved firms, and to estimate the probability of the M and A transaction completion success. We believe that the fluctuating dependence of M and A transactions number over the certain time period is quasi periodic. We think that there are many factors, which can generate the quasi periodic oscillations of the M and A transactions number in the time domain, for example: the stock market bubble effects. We performed the research of the nonlinearities in the M and A transactions number quasi-periodic oscillations in Matlab, including the ideal, linear, quadratic, and exponential dependences. We discovered that the average of a sum of random numbers in the M and A transactions time series represents a time series with the quasi periodic systematic oscillations, which can be finely approximated by the polynomial numbers. We think that, in the course of the M and A transaction implementation, the ability by the companies to absorb the newly acquired knowledge and to create the new innovative knowledge bases, is a key predeterminant of the M and A deal completion success as in Switzerland.Comment: 160 pages, 9 figures, 37 table

Alliance or acquisition? A mechanisms‐based, policy‐capturing analysis

Research summary: While alliance researchers view prior partner‐specific alliance experience as influencing firms' subsequent alliance or acquisition decisions, empirical evidence on the alliance versus acquisition decision is surprisingly mixed. We offer a reconciliation by proposing and testing an analytical framework that recognizes prior partner‐specific experiences as heterogeneous along three fundamental dimensions: partner‐specific trust, routines, and value certainty. This allows us to use a policy‐capturing methodology to rigorously operationalize and test our mechanism‐level predictions. We find that all three mechanisms can increase the likelihood of a subsequent alliance or acquisition, and in terms of the comparative choice between alliances versus acquisitions, partner‐specific trust pulls towards alliances, and value certainty pulls towards acquisitions. We conclude with a discussion of the theoretical and empirical implications of our approach and method. Managerial summary: This study focuses on an important corporate decision: When a firm has had an alliance with another firm, how would that experience affect the likelihood of a future alliance or acquisition with that same firm? We first suggest that it will depend on three factors: the level of trust that existed in that prior alliance, the extent to which specific work routines were developed, and the degree to which the firm was able to confidently assess the value of the partner firm's resources. We then find that trust is a particularly strong predictor of future alliances, while confidence regarding value more strongly predicts future acquisitions. In this way, we demonstrate more precisely how past corporate choices can affect (consciously or unconsciously) future ones

Rating and ranking firms with fuzzy expert systems: the case of Camuzzi

In this paper we present a real-life application of a fuzzy expert system aimed at rating and ranking firms. Unlike standard DCF models, it integrates financial, strategic and business determinants and processes both quantitative and qualitative variables. Twenty-one value drivers are defined, concerning the target firm (strategic assets in place and expected financial performance), the acquisition (synergies, quality of management) and the sector (intensity of competition, entry barriers). Their combination via “if-then” rules leads to the definition of an output represented by a real number in the interval [0,1]. Such a number expresses the value-generating power of the target firm inclusive of synergies with the bidder (Strategic Enterprise Value). The system may be used for rating and ranking firms operating in the same sector. A regression analysis using hostile takeovers multiples may be employed to translate the score into price. The real-life case refers to Camuzzi (a natural gas distributor), acquired by Enel, the Italian ex monopolist of electric energy.Corporate finance, firm, rating, ranking, expert system, fuzzy, evaluation

Three decades of strategic management research on M&As: Citations, co-citations, and topics

Merger and acquisitions (M&As) strategies have been growingly deployed by firms for their domestic and international expansion, to redefine their business scope or take advantage of emerging opportunities. In this paper we conduct a bibliometric study of the extant strategy research on M&As, assessed by the articles published in the main journal for strategic management studies over the period 1984-2010. Results reveal the highest impact works (articles and books), the intellectual ties among authors and theories that form five main clusters of research, and the topics delved into. Performance effects, M&As as diversification strategies and RBV and capabilities-based topics have dominated the extant research. The study contributes to the extant knowledge on M&As by taking stock of the accumulated knowledge and research direction, complementing other literature reviews with a strategic management specific perspective. Thus, we provide a rear view of the field which facilitates detecting untapped gaps that may be munificent avenues for future research.info:eu-repo/semantics/publishedVersio

Rating and ranking firms with fuzzy expert systems: the case of Camuzzi

In this paper we present a real-life application of a fuzzy expert system aimed at rating and ranking firms. Unlike standard DCF models, it integrates financial, strategic and business determinants and processes both quantitative and qualitative variables. Twenty-one value drivers are defined, concerning the target firm (strategic assets in place and expected financial performance), the acquisition (synergies, quality of management) and the sector (intensity of competition, entry barriers). Their combination via “if-then” rules leads to the definition of an output represented by a real number in the interval [0,1]. Such a number expresses the valuegenerating power of the target firm inclusive of synergies with the bidder (Strategic Enterprise Value). The system may be used for rating and ranking firms operating in the same sector. A regression analysis using hostile takeovers multiples may be employed to translate the score into price. The real-life case refers to Camuzzi (a natural gas distributor), acquired by Enel, the Italian ex monopolist of electric energy.Corporate finance, firm, rating, ranking, expert system, fuzzy logic, evaluation

Does patience pay? : empirical testing of the option to delay accepting a tender offer in the U.S. banking sector

We examine the empirical predictions of a real option-pricing model using a large sample of data on mergers and acquisitions in the U.S. banking sector. We provide estimates for the option value that the target bank has in waiting for a higher bid instead of accepting an initial tender offer. We find empirical support for a model that estimates the value of an option to wait in accepting an initial tender offer. Market prices reflect a premium for the option to wait to accept an offer that has a mean value of almost 12.5% for a sample of 424 mergers and acquisitions between 1997 and 2005 in the U.S. banking industry. Regression analysis reveals that the option price is related to both the price to book market and the free cash flow of target banks. We conclude that it is certainly in the shareholders best interest if subsequent offers are awaited. JEL Classification: G34, C1

Do Mergers Improve Efficiency? Evidence from Restructuring the U.S. Electric Power Sector

This paper analyses the performance impact of the merger wave which took place in the US electricity industry during the period 1994-2003. It does so by analyzing the impact on operating and total cost in electricity distribution. While there are past studies of efficiency and productivity effects, as well as of prices, profits, and other outcomes, this study differs in several ways. First, the database consists of many merging and non-merging firms, rather than only a few on which to base inferences. Second, all of these mergers arise in a single industry, greatly facilitating controlled comparison. Third, we have data on the several years of pre-merger and post-merger efficiency of the specific merging units, unlike virtually all past studies. And finally, we employ a powerful nonparametric technique - data envelopment analysis - to measure the efficiency of each operating unit. The results indicate that electricity mergers are not consistent with improved cost performance

Merger Efficiency and Managerial Incentives

We consider a two-stage principal-agent model with limited liability in which a CEO is employed as agent to gather information about suitable merger targets and to manage the merged corporation in case of an acquisition. Our results show that the CEO systematically recommends targets with low synergies—even when targets with high synergies are available—to obtain high-powered incentives and, hence, a high personal income at the merger-management stage. We derive conditions under which shareholders prefer a self-commitment policy or a rent-reduction policy to deter the CEO from opportunistic recommendations