Mergers and acquisitions are often justified on the basis of future opportunities as well as immediately adding to shareholder value. Yet, often such justification fails to pan out.
How would the influence of considerations of entry and exit drive expectations of success on a merger? In recent years, Chinese firms have sought mergers to enter new markets. What are the pluses and minuses that face the Chinese as they attempt to expand?
Mergers also promise economies of scale and scope. Explain how such promises could deliver shareholder value. How would such promises fail to deliver value? How would you evaluate the AOL Time Warner merger in terms of economies of scale/scope?