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If managers are rational, mergers should always lead to an increase in shareholder value. Discuss this statement in view of the relevant analysis of mergers and acquisitions

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All these advantages of mergers and acquisition must always be reflected in the growth of organizations shares, hnce increasing the share value of an organization (Van Horne and Wachowicz, 2009). Hwever, tis is not always the case on most of the mergers that occur. Tis is because an acquisition and a merger is always a very complex procedure, ad on most occasions, i is difficult for the managers to accurately evaluate the transactions, te benefits, te costs, ad the legal and tax issues that emanate from the mergers Cstodio (2013) denotes that one of the factors that normally discourage mergers and acquisitions is the high transaction costs associated with this process.

I is important to understand that before commencing a merger or an acquisition, tere are a variety of costs that the business under consideration must look into. Tis includes legal costs, txes, te various debts of the organization under consideration, te operational expenses of the new unit to be formed (DePamphilis, 2012). It is important to understand that these costs are always high, ad most organizations to meet these costs.

Lgal costs might arise when one company, potests against the merger, ad an example is in 2008 when Well Fargo wanted to acquire Wachovia. Cti Group was against this initiative, ad it planned to initiate a legal challenge against this acquisition. Gughan (2011) denotes that 60-80% of mergers are not always successful. De to the failure of these mergers, te share values of these companies usually depreciate. I is important to understand that on most occasions, te managers of a business organization are not for failure of these mergers.

Gldberg (2011) denotes that the decision to acquire or merge with another firm is capital intensive, ad managers do not have the capability of preventing a merger or an acquisition, oce shareholders decide to do so. Hwever, Gughan (2011) denotes that managers can have a decision on whether their company should merge or acquire another company, i their interests are aligned with the interests of the shareholders. I is important to denote that the interest of the manager can be aligned with that the shareholders the manager has some substantial shares within the organization.

Tis would also make the manager be willing to take risks, fr purposes of ensuring that the. ..

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