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Chapter 9
The impact of mergers and acquisitions
on stakeholders
3.1 The importance of other stakeholders
If synergy is created on acquisition, this will benefit shareholders. It is
important to understand the impact of a merger/acquisition on other
stakeholders too.
Stakeholder group Impact
Acquiring company's shareholders Primary objective is to maximise
shareholder wealth, so creation of
synergy should benefit the acquiring
company's shareholders.
Target company's shareholders Premium usually paid to encourage
them to sell their shares.
Lenders/debt holders Debt is often repayable in the event of
a change in control (‘change in control
clause’) – risk profile of the acquirer
may be quite different from that of the
original borrower and the lender will
not wish to become exposed to a
higher credit risk.
Managers and staff Redundancies often made to generate
synergies BUT bigger combined
company may give better career
opportunities.
Society as a whole Competition law in most countries
prevents monopolies being created
which might be able to exploit their
power to take advantage of customers.
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