Company Acquisition Strategy: Mergers and Acquisitions Guide
This paper examines the strategic process of acquiring a foreign firm, using the hypothetical case of I-Look Company, a US-based optical retailer in Columbus, Ohio, seeking to acquire Yengo Enterprises, an East African eyewear business operating in Nairobi, Kampala, and Kinshasa. The paper covers the buyer- and seller-side acquisition processes, common reasons for M&A failure, institution-based and resource-based challenges, and managerial considerations such as hubris and diversification. Drawing on frameworks from strategic management literature, the paper provides a structured overview of how a CEO might approach a cross-border acquisition to maximize value and minimize risk.
- Introduction to the Acquisition Context: I-Look seeks to acquire East African firm Yengo
- The Buyer and Seller Acquisition Process: Step-by-step buyer and seller M&A procedures
- Why Mergers and Acquisitions Fail: Key reasons acquisitions collapse with examples
- Institution-Based Issues in Cross-Border Acquisition: Formal and informal institutional influences on strategy
- Resource-Based Issues and Managerial Motives: Tangible resources, diversification, and hubris risks
- Ensuring Acquisition Success: Expert team and structured procedures for success
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What makes this paper effective
- The paper grounds abstract M&A theory in a concrete hypothetical scenario — the I-Look/Yengo acquisition — giving readers a practical anchor for each conceptual discussion.
- It systematically addresses multiple strategic dimensions (institutional, resource-based, managerial) in separate sections, reflecting a well-organized analytical structure.
- Real-world examples such as Compaq's acquisition of Digital and IT&T's acquisition of NCR are used to illustrate why acquisitions fail, adding credibility and depth.
Key academic technique demonstrated
The paper demonstrates applied theoretical synthesis: it takes established frameworks — including the institution-based view (Peng et al., 2008), resource-based theory (Steiner, 2005), and strategic management concepts (Hitt et al., 2010) — and applies them to a specific business scenario. This technique shows how academic models can guide real managerial decision-making, which is a hallmark of business strategy writing at the undergraduate level.
Structure breakdown
The paper follows a question-and-answer format typical of applied business assignments. It opens by establishing the acquisition context, then walks through buyer- and seller-side processes, addresses M&A failure rates, and explores institution-based and resource-based concerns before concluding with managerial motives, hubris, and a success strategy. Each section builds logically on the last, forming a coherent end-to-end acquisition analysis.
Introduction to the Acquisition Context
I-Look Company is a major business based in Columbus, Ohio, that specializes in the sale of all types of eyewear — including spectacles for the visually impaired and sunglasses of all designs. The company has been in operation since 1998 and seeks to expand into the African market by acquiring Yengo Enterprises, which operates in major East African cities: Nairobi, Kampala, and Kinshasa. As CEO of I-Look, several critical issues must be considered before proceeding with this acquisition.
There are many reasons why business owners decide to sell. These include a lack of capital to reinvest in the company, retirement plans, partnership disagreements, a desire to reduce liability risks, poor health or death of the owner, and inadequate management skills (Sherman, 2010). On the other hand, a company may have several strategic reasons to acquire another firm. The primary motivation is often a projected increase in cash flows, with the expectation that the combined business will add measurable financial and market value (Miller, 2011).
Before proceeding with any acquisition, it is essential for the buyer to analyze the expected return on investment. The acquisition will be shaped by several constraints: the availability of funds, the availability of the opportunity, and the anticipated return. The buyer must compare investment options carefully and weigh potential risks by evaluating probable positive and negative outcomes. While investors should be loss-averse to guard against significant losses, they must also recognize that some degree of risk is inherent in all transactions and should not be a deterrent (Miller, 2011).
References
Hitt, M. A., Ireland, R. A., & Hoskisson, R. E. (2010). Strategic management: Competitiveness and globalization, concepts (9th ed.). Cengage Learning.
Miller, E. L. (2011). Mergers and acquisitions: A step-by-step legal and practical guide. John Wiley & Sons.
Pearson Education. (2012). Why acquisitions fail — the 20 key reasons. Retrieved from http://www.pearsoned.co.uk/bookshop/article.asp?item=439
Peng, M. W., Wang, D. Y. L., & Jiang, Y. (2008). An institution-based view of international business strategy: A focus on emerging economies. Journal of International Business Studies, 39, 920–936.
Sherman, A. J. (2010). Mergers and acquisitions from A to Z (3rd ed.). AMACOM.
Steiner, F. (2005). Formation and early growth of business webs: Modular product systems in networked markets. Springer.
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