Mergers & Acquisitions One of the more fascinating and complex part of corporate news and maneuvering is when companies engage in mergers and acquisitions as a means to further their growth, development and diversification. This report shall look at two companies in particular, those being Mattel and Texas Instruments. After conducting a thorough literature review, questions about both firms will be posed and answered. While there is more than one way to launch a takeover or acquisition bid for a firm, there are some ways and methods that are better than others.

Mattel Case Study

Now that the literature relative to mergers and acquisitions has been properly sampled and queried, it should now be ascertained what the answers are to the questions described in the introduction, with Mattel being the first firm addressed. Mattel has proven themselves to be concerned with branching out and modernizing their product mix and feel due to the changing technologies, tastes and trends of the market. Indeed, Mattel has made a mint off of Barbie and other toys over the years. However, as proven by the demise of firms like Blockbuster and others, standing pat and not evolving with the time in terms of product type and product mix can be the death of a company over the long-term. As such, it should be no surprise that Mattel is branching out in terms of making use of more modern products and marketing such as iPads and video games, just to name two things. Rather than rely on reputation and history, Mattel is interested in products that are constantly being buzzed and spoken about in the marketing and other spheres. Mattel is interested in diversifying in that way to keep their brand name and market share where it is, or better (Brown, 2013). Per the advice of Chang et al., they would be wise to pull advisers that previously worked for the firms that they are interested in acquiring so as to make sure that the firm in question would be as complementary as would be desired by Mattel (Chang, Shekhar, Tam & Yao, 2016). If it is not reasonable or even possible to get any sort of first-hand information about the firm to be acquired, the analysis and perspective of investment bankers and stock analysts can be a good source. They, like Mattel, are looking from the outside in. However, those investment bankers do that sort of thing for a living and they probably have a penchant for spotting red flags and positive signs when it comes to whether a firm is good acquisition material or is otherwise financially sound (Haushalter & Lowry, 2010). The acquisition being complementary is important because the idea is to expand shareholder wealth. If the acquisition would excessively space out and segment the strengths of Mattel, there is a good chance that the opposite would occur (Alexandridis, Petmezas & Travlos, 2010). A word of caution, however, that many firms including Mattel should take heed of is that there is always going to be some modicum of uncertainty and unknown when it comes to acquisitions. Even with all of the due diligence that is done, there are always going to be things that are not discovered, or at least discovered quickly, during the acquisition process. Further, market volatility can wreak havoc even if everything else is seemingly in line.

When it comes to maximizing and upholding shareholder wealth as juxtaposed against mergers and acquisitions, a very important part of the calculation with the same is to execute transactions, mergers and acquisitions at the right time. There is such a thing as waiting too long and not "pouncing" when the opportunity is there. However, there are also times where waiting just a little longer can make a huge difference. Mattel is big enough and powerful enough to pick their spots. They can get what they need and want out of an acquired firm but they need not pay more when a little bit of timing can save them millions, if not billions, of dollars (Tarsalewska, 2014). If the surrounding market is in bad shape and this in any way includes things like bank runs and other financial instability (like during the Great Recession in 2007-2009), Mattel should probably keep things conservative and cautionary, even if they have the resources to do otherwise (He & Manuela, 2016). Further, Mattel is big enough that they often don't have to worry about doing mergers or having to otherwise absorb a firm that is remotely...

Indeed, Mattel snapping up other firms is more about expanding market share and strategic advantage than it is about taking out the largest competitors (Degryse, Masschelein & Mitchell, 2010). That being said, Mattel would be wise to keep in mind that competition is both domestic and international and there are firms across the ocean that have much lower labor and other costs, even if it is for dubious and unethical reasons. Even when Mattel itself operates internationally, they have to abide by the concepts and rules of corporate social responsibility and ethics as defined by the West and their home markets in general (Brealey, Cooper & Kaplanis, 2009). Simple compliance with the law is something that lawyers and other compliance experts can help Mattel traverse when the time comes. However, the burden just begins there . . . it does not stop there by any means (Bris & Cabolis, 2008).
When it comes to the alternatives to acquisition that Mattel can explore, the basic options are organic growth and inorganic growth, with acquisitions obviously being the latter. When it comes to organic growth, there are sub-options such as keeping with the ground-based strategy of yesteryear or instead expanding their market to include online sales on their own website as well as others like Amazon. In the end, the latter is really not an option as online sales juggernauts like Amazon have problem that firms, even market leaders like Mattel, are extremely unwise not to take full advantage of online markets because even previously dominant ground-based retailers like Wal-Mart and Best Buy are starting to feel the pinch from online sales giants. Even with that, there are real barriers to entering the toy industry. This is largely because industry giants and leaders like Mattel have the size and power to dominate shelf space and this tends to keep out smaller startup firms and regional competitors in the same realm. Their size allowed them to charge lower prices while also protecting their margins. As far as how firms like Mattel can and should protect themselves via due diligence, they need to use the precepts explored in the literature review including having advisors that used to work for firms to be acquired or at least know the toy industry, make sure that they are dealing with firms to be acquired that are being fair and transparent and taking into account the international and other implications of a merger. Mattel is obviously a giant amongst men in their part of industry. Firms that are fearful or even inviting of Mattel's acquisition may or may not be as open and honest about their operations. For that reason, they may be less than transparent or honest about what is really going on within their firm (Gompers, Kaplan & Mukharlyamov, 2016).

Even with the proverbial landmines that Mattel faces when doing acquisitions and even with the dishonesty that sometimes manifests, Mattel still has to be mindful of the "eat or be eaten" mentality. Indeed, even firms that were once the unquestioned leaders of their part of industry, such as McDonald's and Wal-Mart, are now being threatened by competitors and upstarts like Five Guys, Panera and Amazon. As such, Mattel simply cannot stand pat and just assume that their girth and size will save them. Just as the internet is chipping away at Wal-Mart, so too will happen to Mattel if they are complacent, assuming it is not happening already. Mattel must find a way to adapt to the new market realities lest they be overtaken by other firms, including firms that are not toymakers (Gorton, Kahl & Rosen, 2009). As such, Mattel needs to be sure to be the company that is consuming and growing their share of the market rather than just hoping that no one catches up with them. There are ways for mergers to go south but most of them can be avoided with the proper homework and caution (Duchin & Schmidt, 2013; Devos, Kadapakkam & Krishnamurthy, 2008). One example of a way a deal can be very good versus very bad is the capital structure that is used to do the deal. Mattel is in a position where they can use cash or cash equivalents much more easily than other firms. They should probably use that to their advantage because using debt to excessively can be problematic. At the same time, debt can indeed be used in a way that helps grow the firm for minimal cost. As with most things, a balance is a…