Risk Management in Mergers and Acquisitions

M&A statistics show that less than a third of newly merged companies has realized their planned synergistic effects and increased shareholder value. According to the author, such disgusting situation is due to improper planning and failure of corporate management to understand the importance of...

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Autor principal:	D. O. Verdiev
Formato:	article
Lenguaje:	EN RU
Publicado:	MGIMO University Press 2015
Materias:	m&a risk management m&a risks mergers and acquisitions corporate risks International relations JZ2-6530
Acceso en línea:	https://doaj.org/article/474b4a1a615b491693c58bd6f0dced85
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spelling	oai:doaj.org-article:474b4a1a615b491693c58bd6f0dced852021-11-23T14:51:00ZRisk Management in Mergers and Acquisitions2071-81602541-909910.24833/2071-8160-2015-3-42-232-238https://doaj.org/article/474b4a1a615b491693c58bd6f0dced852015-06-01T00:00:00Zhttps://www.vestnik.mgimo.ru/jour/article/view/374https://doaj.org/toc/2071-8160https://doaj.org/toc/2541-9099M&A statistics show that less than a third of newly merged companies has realized their planned synergistic effects and increased shareholder value. According to the author, such disgusting situation is due to improper planning and failure of corporate management to understand the importance of risk management in M&A. Lack of practice in identification, evaluation, mitigation and regular monitoring of risks leads to the situation when many companies merge despite the fact that the merger bears substantial risks. Corporate management fails to include risk mitigation expenses in merger costs. In many cases, risk mitigation expenses may be so substantive that the merger loses its attractiveness. Only few companies implement risk management methodology while planning M&A activity. This methodology may anticipate and minimize the consequences of various risk factors that negatively influence integration process. The article suggests an implementation of risk management best practice. This risk management best practice may act as an effective tool of successful realization of synergistic effects in M&A and may be helpful in increasing shareholder value in post-merger period. Risk management is conducted throughout the stages of merger and includes identification, analysis, assessment, management and monitoring of risks. Implementation of risk management at early stages of merger planning significantly decreases uncertainty in relation to achievement of financial and operational goals of newly merged company. The article provides with typical M&A risk matrix that may be adapted for specific M&A project. Risk matrix includes a register of risks sorted by stages of M&A deal, quality assessment of their probability, influence and impact on merger as well as risk mitigation methods.D. O. VerdievMGIMO University Pressarticlem&arisk managementm&a risksmergers and acquisitionscorporate risksInternational relationsJZ2-6530ENRUVestnik MGIMO-Universiteta, Vol 0, Iss 3(42), Pp 232-238 (2015)
institution	DOAJ
collection	DOAJ
language	EN RU
topic	m&a risk management m&a risks mergers and acquisitions corporate risks International relations JZ2-6530
spellingShingle	m&a risk management m&a risks mergers and acquisitions corporate risks International relations JZ2-6530 D. O. Verdiev Risk Management in Mergers and Acquisitions
description	M&A statistics show that less than a third of newly merged companies has realized their planned synergistic effects and increased shareholder value. According to the author, such disgusting situation is due to improper planning and failure of corporate management to understand the importance of risk management in M&A. Lack of practice in identification, evaluation, mitigation and regular monitoring of risks leads to the situation when many companies merge despite the fact that the merger bears substantial risks. Corporate management fails to include risk mitigation expenses in merger costs. In many cases, risk mitigation expenses may be so substantive that the merger loses its attractiveness. Only few companies implement risk management methodology while planning M&A activity. This methodology may anticipate and minimize the consequences of various risk factors that negatively influence integration process. The article suggests an implementation of risk management best practice. This risk management best practice may act as an effective tool of successful realization of synergistic effects in M&A and may be helpful in increasing shareholder value in post-merger period. Risk management is conducted throughout the stages of merger and includes identification, analysis, assessment, management and monitoring of risks. Implementation of risk management at early stages of merger planning significantly decreases uncertainty in relation to achievement of financial and operational goals of newly merged company. The article provides with typical M&A risk matrix that may be adapted for specific M&A project. Risk matrix includes a register of risks sorted by stages of M&A deal, quality assessment of their probability, influence and impact on merger as well as risk mitigation methods.
format	article
author	D. O. Verdiev
author_facet	D. O. Verdiev
author_sort	D. O. Verdiev
title	Risk Management in Mergers and Acquisitions
title_short	Risk Management in Mergers and Acquisitions
title_full	Risk Management in Mergers and Acquisitions
title_fullStr	Risk Management in Mergers and Acquisitions
title_full_unstemmed	Risk Management in Mergers and Acquisitions
title_sort	risk management in mergers and acquisitions
publisher	MGIMO University Press
publishDate	2015
url	https://doaj.org/article/474b4a1a615b491693c58bd6f0dced85
work_keys_str_mv	AT doverdiev riskmanagementinmergersandacquisitions
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Risk Management in Mergers and Acquisitions

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