Most Successful Mergers And Acquisitions Of All Time

While many marriages end in divorce, people continue to seek out a partner to spend the rest of their lives with. The same is true of mergers and acquisitions. While many fail, the successful ones give corporate finance professionals and business tycoons hope for the future; that the marriage of two companies can repair a broken bottom line, for better or worse.

To celebrate these successful unions, Rasmussen College compiled a list of the most (and least) successful mergers of all time. What went right, and why can't all business transactions have their happy-ever-after?

Disney-Pixar While Disney was already releasing Pixar films before the merger, the marriage allowed Pixar resources and merchandising they were never able to achieve before. This explains why films like Toy Story and Finding Nemo can't match the smash hit Cars when it comes to merchandising. Disney has released 2 Pixar films a year since the merger, a production level unheard of before Disney came into the picture.

Sirius-XM Radio Acquisition finance professionals and analysts thought Sirius and XM would become the Coke and Pepsi of the satellite radio world. But on July 29, 2008, the two companies joined forces, effectively creating a monopoly over the world of digital radio. With huge assists from stars like Howard Stern, Martha Stewart and Oprah, both companies saw unprecedented business as many car companies made XM/Sirius an option on all cars they sell. Once the two companies were able to get around FCC licensing restrictions, the merger was instantly successful and still has no equal.

Exxon-Mobile: This $81 billion deal forged in 1999 created the world-wide leader in oil production. Today the company is leading the charge on many energy breakthroughs that can keep the company in business long after oil.

How Mergers and Acquisitions Affect Businesses

Mergers and acquisitions is a critical part of many businesses and it can have an impact on the general market as well. When a business merges with or acquires some other business, it completely changes the dynamic of that company and can have an impact on many employees.

A merger is a process by which two companies come together to form a single business entity. This is often done with companies in the same industry so that they can increase market share or bring in more customers. Mergers are sometimes completed because each company brings something special and unique to the table that the other company does not have. This could come in the form of specialized staff or intellectual property that is necessary to fulfill business objectives.

The other aspect of mergers and acquisitions deals with larger companies acquiring other companies. In some cases, big companies simply want to get rid of any potential competition, so they buy up many smaller companies. In other situations, the bigger company may want to gain access to a patent or product that the smaller company offers, so they simply buy the company. Then they take that idea and develop it with their greater resources and capital. This sometimes has the potential to bring solid products or services to a bigger market.

The area of mergers and acquisitions also sometimes deals with splitting up companies. When a company gets too big, it sometimes needs to split into multiple companies in order to avoid anti-trust laws. Sometimes a company may start working into many different areas and it wants to split into smaller subsidiaries so that it can focus on these specific areas. If a company gets too big, it may not be able to maneuver like it wants to. Dividing the company can make it more nimble and sometimes more attractive to investors. Whether splitting up a company or doubling its size, mergers and acquisitions can have a drastic impact on how companies operate.

What is the Significance of Mergers and Acquisitions?

Mergers and Acquisitions are when two become one. Two businesses, usually in the same industry, unite to pool their resources. There are various types of acquisitions and mergers which are an increasing business trend in various industries.

These acquisitions and mergers can provide numerous advantages for the merging parties. For example, the most obvious advantage that a business merger brings is an expansion of the financial scope and resources of the newly merged business. Acquisitions and mergers can therefore provide new possibilities.

Diversification is another buzzword of mergers and acquisitions. When two businesses with no common business areas merge this is conglomeration. If the two businesses are more unique then a merger can ensure a more diverse product portfolio. This is especially the case if the target business is in a different industry. 

Mergers and acquisitions are also another factor behind business monopolies and uncompetitive industries. From a more general economic perspective monopolies can be considered a disadvantage of acquisitions and mergers. For example, the Microsoft OS monopoly ensures that there is little in the way of alternatives to the Windows OS, except perhaps the Linux OS and the Apple Mac OS.

As such, the more general economic advantages of acquisitions and mergers are more debatable. Industries can become less competitive as smaller businesses merge with larger ones. However, for the business stakeholders mergers and acquisitions can have undoubted advantages, especially their investors if the business is a public limited company.