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MOTIVES FOR MERGERS AND ACQUISITIONS IN SMALL AND MEDIUM ENTERPRISES
Abstract
One of the most widely used means in achieving firms growth and development are mergers and acquisitions (M&As). However, numerous empirical studies have questioned the success of M&As in increasing the firms value for their owners. Even though varying in methodology, sample size and structure, monitored time and geographical spread, the majority of research indicate that many M&As fail in accomplishing described criteria, i.e. that they do not increase the firms business success. This opens questions about the popularity of M&As since it is well known that there is a high rate of M&As failures in creating value. Organizational theory provides understanding three groups of motives for M&As: strategic (or market) motives, synergetic motives and managerial motives. The analyses of the motives show that the firms goals for engaging in M&As could sometimes be reached even when financial analyses show failure. However, most attention, regarding M&A success, is focused on publicly listed firms, even though the majority of firms are small and medium-sized enterprises (SMEs). Due to their smaller degree of organizational complexity, limited reach to market and financial opportunities and higher resource dependency, it could be expected that their motives and goals in M&A processes are somewhat different than those of larger firms. In addressing these issues, we have tried to analyze the motives leading SMEs to engage in M&As. We conducted a questionnaire among SMEs in Croatias Primorsko-goranska County which allowed us to determine the share of firms interested in future M&A involvement. For those that showed interest, we have then analyzed their motives. Although the achieved results are partially inconclusive and require further research, they allow us to the conclude that the motives for SME interest in future M&As are primarily strategic and that they mostly do not expect significant cost savings through organizational synergies.
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