MERGERS AND ACQUISITION AND THE PERFORMANCE OF FIRMS IN NIGERIA
CHAPTER ONE
1.2 STATEMENT OF THE PROBLEM
In the high confusion and tumults of the modern business environment globally, economic hardship has affected most compared and industries are at the edge of distress, some have flowed while others manage to keep afar. However, the effect of bad economic situation on companies in Nigeria warrants the need for merger and acquisition- while some companies merged or acquired so as to build a strong capital base and those that have strong capital base are searching for safe, profitable and efficient ways to employ the capital base. Mergers or acquisitions to enable them respond to the challenges of present business environment, meet up with the intensive competition in the global frame work and to build up enormous financial strength for unviable companies, same others acquire or merger to diversify into Nero markets, increase market share, expand product line, maximize financial potential, achieve technological success.
Hence, the completion of a merger does not ensure the success of the resulting organization, indeed, many mergers (in some industries the majorly) result in a net loss of value due to the problems of firm performance correcting problems caused by incompatibility, whether of technology equipment or corporate culture adverts resources away from new investment and this problem may be exacerbated of inadequate research of by concealment of losses or liabilities by one of the partners.
Overlapping subsidiaries or redundant staff may be allowed to continue creating inefficiency and conversely the micro management may cut too many operations or personnel, losing expertise and disrupting employee culture. These problems are similar to those encountered in takeovers for the merger not to be considered a failure must increase shareholder value faster than the companies were separate or prevent the deterioration of shareholders value more than the companies were separate by identification, the specific problems that could emanate from mergers and acquisition activities are poor strategic ationa1e, mismatch of cultures, difficulties in communicating and leading the organization, poor integration planning and execution, playing too much for the target company, slow post merger integration, culture clashes can lack of appropriate risk management strategies.
1.3 OBJECTIVES OF THE STUDY
The broad objective of this project is to investigate the impact of mergers and acquisition in firm performance in Nigeria.
However, specific objective are as follows:
1. To evaluate the effects to mergers and acquisition on performance of selected banks.
2. To determine the influence of mergers and acquisition on asset base and work performance
3. To identifies the impact merger and acquisition on profit and value of firms performance
1.4 RESEARCH QUESTIONS
A past from the research objectives, research questions further delineate the boundary of the research and give if an overall direction. For this study, the following are the major research questions.
– How has mergers and acquisitions promoted better transparency and accountability in Nigeria’s financial service sector?
– To what degree has mergers and acquisition contributed to the economic and financial development of asset base and performance? Merged or acquired.
1.5 SIGNIFICANCE OF THE STUDY
With the recent increase in the incident of investigation and bankruptcy of company together with dwindling economic situation of the country, there is need for the examination: f the effect of business mergers and acquisition in the performance of the Nigeria business organization, it is however believed that with the study of the companies that are involved be able to assess the means of survival, one would be able to access the profitability of the strategy being widely adopted in the Nigerian economy as a growth and survival strategy. It will adequately consider mergers and acquisition result in banks redirecting their focus from deposit mobilization to asset creation increase in customer contain prove. It is also of critical significance to explain the concentration of qualify human capital instead of the current dissipation over a large numbers of banks
1.6 SCOPE OF THE STUDY
Mergers arid acquisition has become one of the fashionable surviving strategy for many companies it is therefore the intention of this study to investigate the effect of mergers and acquisition on the performance of UBA, First Bank, Stanbic IBTC And Access Bank. Also this study covers the period from 2008-2013
1.7 RESEARCH HYPOTHESIS
Based on the problems states above the following hypothesis is therefore formulated?
Hypothesis 1
Ho: Mergers and acquisition has not fostered higher market value of forms stock
Hi: Mergers and acquisition has fostered higher market value of firms stock.
Hypothesis 2
Ho: There is no significant difference between asset base and work performance in selected banks that have merged or acquired
Hi: There is significant difference between asset bas and work performance in selected banks that have merged or acquired.
Hypothesis 3
Ho: The profitability of selection banks are not dependent on mergers and acquisitions
Hi: The profitability of selected banks are dependent on merger bank acquisition.
1.8 LIMITATION OF THE STUDY
The merger constraints or limitations suffered by the research is high cost associated with collation of data coupled with time shortage as well unavailability of relevance materials, non corporation of employees in selected banks. With these entire problems notwithstanding. It is hoped that the study will satisfy its objectives. This would hopefully lead to improved thought processes and output, and should be reflected in better banking product offerings, better resources management and new ways of doing things. Invariably, shareholder, consumer, customer, student and government in understanding the effect of M and A’s on firm-performance. It is in the light of the foregoing that the subject of this study is considered very significant.