Panel 3: Doing, Implementing and Following The Deal - "Insider" Views (Slides & Presentations) Bower p. 1-8 Earnest p. 9-11 Hernandez p. 12-19 Jones p. 20-22 Joseph L Bower - FTC Roundtable 1 A managerial perspective on M&A Joseph L. Bower Harvard Business School FTC Roundtable on M&A December 9, 2002 A Managerial Perspective on M&A M&A is a make or buy decision Three types of managerial perspective: Š The variations in what the managements are trying to accomplish Š The process over time Š The process of implementation Joseph L Bower - FTC Roundtable 2 7 Different Strategic Objectives: Š Reduce overcapacity, eg Chemical Bank merges with Chase (mega-mergers) „ Acquire or merge with competitors to take capacity off line and rationalize other activity „ Use larger market share to strengthen pricing Š Roll up a fragmented industry, eg. BancOne in the 1980’s „ Expand geographically in an industry with local delivery – often a service Š Product or market extension, Quaker buys Snapple „ Extend product line, or enter new country markets 7 Objectives, cont. Š Use M&A as R&D, eg Microsoft buys Vermeer „ Acquisitions used instead of R&D to build position quickly Š Build a new industry, eg Viacom buys Paramount „ A bet that there are strategic benefits to be gained from integration across industries Š An Investor Buy-out „ A bet that value can be created with new, private, leveraged ownership Š and Blue fish