Introduction
Mergers and acquisitions have always been a part of the corporate world. Albert Heijn had to start somewhere. Many firms, financial or non-financial, are in the position of having to choose whether or not they should merge or acquire another firm. During this process there are many factors that have to be kept in mind to make sure that the firm value will increase or at the least remain at its present value. This poses as a problem for many managers. We will be trying to answer the question of how management will be able to prevent a decrease in firm value. In this paper we will address three factors that are important of insuring that all goes well during a merger or acquisition. This will be guided by the information we have found and will be expounded in the three chapters of this paper.
The first chapter will introduce the influence performance-based pay has on the firm value after an acquisition or merger.
Chapter two will try to inform you about the effect that shareholdings by management have on the firm value during and after a merger or acquisition. For will an executive or manager’s interest be aligned with that of a shareholder or stakeholder with or without the help of compensation and if necessary which mechanisms are available to do so.
Last but not least, chapter three shall head the role of debt on the firm value related to a merger or acquisition. To finish this paper we will discuss our findings in the conclusion and try to answer the main question.
The influence of performance-based pay on mergers and acquisitions.
The relation between performance-based pay for managers and shareholder’s wealth has been well documented. Performance-based pay links the amount paid to the amount of performance shown by an ...