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THE ROLE OF MERGERS AND ACQUISITIONS IN CORPORATE GROWTH AND DEVELOPMENT

ABSTRACT

The study’s main focus was on the role of mergers and acquisitions on business growth and development, with Access Bank Plc Abuja as a case study. For the study, a survey research design was used with the help of a convenient sample procedure, and thirty-six (36) participants were chosen from the personnel of Access Bank Plc in Abuja. The participants were given a well-structured questionnaire, of which 30 were returned and validated for the study. Frequencies and tables were used to give descriptive analysis, which supplied responses to the study topic. The data was evaluated using simple percentages. The study’s findings reveal that economies of scale, synergy, product and service diversification, and competition elimination are all reasons why companies choose to merge and acquire. The analysis suggests that mergers and acquisitions are a successful and efficient business growth strategy. As a result, the study suggests that companies that have adopted merger and acquisition should identify high-risk areas of their business and ensure that they receive adequate attention on a regular basis for strategic positioning. To avoid disintegration and collapse of the plan, organizations who used merger and acquisition as a growth strategy in their corporate organization should integrate their systems.

CHAPTER ONE

INTRODUCTION

Background of the study

Business organizations are formed to achieve specific corporate goals, such as increased profitability and corporate growth. Growth is one of the most important indicators of a company’s success. Given that businesses operate in a dynamic macroeconomic environment, growth is jeopardized during periods of economic insecurity (Weston and Copeland, 1989). The recent global economic disaster has resulted in a financial crisis among corporate entities. Mergers and acquisitions are one of the options available to businesses during economic downturns. Since the dawn of time, businesses have been joining in various combinations. A merger, according to Gaughan (2007), is the joining of two corporations in which only one survives and the merged corporation ceases to exist. In a merger, the acquiring company takes on the merged company’s assets and liabilities. Furthermore, despite the fact that the buying firm may be a quite different entity following the merger, it preserves its original identity. When one company buys a controlling stake in another, a legal subsidiary of another, or specific assets of another, such as a manufacturing facility, it is known as an acquisition. To put it another way, an acquisition, according to DePamphilis (2003), is the purchase of an asset such as a plant, a division, or even a whole company.

Statement of the problem

Nigeria’s current economic state can best be defined as tumultuous, with troubles manifesting themselves more in corporate entities. The scope of the problem is such that domestic corporations are rapidly losing market share, in addition to experiencing continual operating losses and liquidity crises, resulting in an inability to meet market needs. Low turnover, low profit, low dividend payout, declining growth rate, and high operational costs are among the other key difficulties affecting corporate organizations in the country. Given the growing interdependence of markets for various goods and services, as well as increased international competition, Osaze (2004) believes that we are living in a period of significant change. Although there is a wealth of literature and studies on mergers and acquisitions, few, if any, of these studies focused on the impact of mergers and acquisitions on corporate growth, efficiency, and profitability. This study addresses the question of whether merger and acquisition is the greatest method for bailing out a company in financial trouble, as well as the consequences of merger and acquisition on corporate profitability

Objective of the study

The study’s main goal is to look into the role of mergers and acquisitions in company growth and development. The study’s objectives are as follows:

To investigate why a cooperative organization would choose to merge and acquire another cooperative organization.
To investigate the impact of mergers and acquisitions on the growth of cooperative organizations.

To determine whether mergers and acquisitions are a viable strategy for improving corporate performance.

To see if the consolidation plan improves the acquired company’s employees’ productive behavior.

Research Questions

What are the advantages of merging and acquiring by a cooperative organization?
What is the impact of mergers and acquisitions on the growth of cooperative organizations?

Is merger and acquisition a viable option for a corporate organization’s effective performance?

Is the consolidation strategy improving the acquired company’s employees’ productive behavior?

Significance of the study

The research is significant because it will be very useful to economic watchers and the wider public; it will provide some insight into the merger process and banking administration in the reform era. It will also demonstrate how mergers and acquisitions respond to the establishment of stable economic growth. Scholars and researchers will be able to refer to it as a repository of reserved knowledge. Finally, the research will provide sufficient information on the existing body of knowledge regarding people’s problems during mergers. The research will also act as a resource for scholars and students interested in conducting future research in a similar topic.

Scope of the study

The goal of this research is to look at how mergers and acquisitions affect business growth and development. The study will also look into why cooperative organizations choose mergers and acquisitions, as well as how mergers and acquisitions affect cooperative growth. The study aims to assess whether merger and acquisition is a viable choice for effective business performance, as well as whether consolidation approach enhances productive behavior among acquired company employees. However, the research is confined to Access Bank Plc in Abuja.

 Limitation of the study

The researchers ran into some minor roadblocks while conducting the study, as with any human endeavor. The researcher faced a significant constraint in the form of a lack of literature on the subject due to the nature of the discourse, which resulted in higher financial costs and more time spent sourcing relevant materials, literature, and data collection, which is why the researcher chose a small sample size. In addition, the researcher will conduct this research while also working on other academic projects. In addition, the sample size was restricted to Access Bank Plc in Abuja. Because only a few people were chosen to reply to the research instrument, the conclusions of the study cannot be applied to other businesses.

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