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Fighting economic nationalism in deals: FT mastering transactions series

Author: Capron, Laurence ; Guillén, MauroINSEAD Area: StrategyIn: Financial Times, 13/10/2006 Language: EnglishDescription: p. 10-11.Type of document: INSEAD ArticleNote: Please ask us for this itemAbstract: Many companies do not consider how countries protect key stakeholders, such as shareholders and workers. Laurence Capron from INSEAD and Mauro Guillén from Wharton explain why the issue merits attention. Their message is straightforward. MandAs may be "one of Nature's methods of eliminating deadwood in the struggle for survival," as Nobel laureate Paul Samuelson famously put it in his widely-read introductory textbook, Economics. However, Capron and Guillén stress that power processes drive the selection of takeover targets, the likelihood of completion of the deal, and the post-acquisition process of restructuring. In the short term, the potential for a conflict of interest between the new shareholders and the employees of the target firm is very large. Therefore, Capron and Guillén recommend that acquirers should assess the strength of the various stakeholders in order to understand how the acquisition process might ultimately unfold. Given the national differences in the extent to which stakeholder rights are protected, where firms acquire may end up being as important a consideration as what they acquire.
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Many companies do not consider how countries protect key stakeholders, such as shareholders and workers. Laurence Capron from INSEAD and Mauro Guillén from Wharton explain why the issue merits attention. Their message is straightforward. MandAs may be "one of Nature's methods of eliminating deadwood in the struggle for survival," as Nobel laureate Paul Samuelson famously put it in his widely-read introductory textbook, Economics. However, Capron and Guillén stress that power processes drive the selection of takeover targets, the likelihood of completion of the deal, and the post-acquisition process of restructuring. In the short term, the potential for a conflict of interest between the new shareholders and the employees of the target firm is very large. Therefore, Capron and Guillén recommend that acquirers should assess the strength of the various stakeholders in order to understand how the acquisition process might ultimately unfold. Given the national differences in the extent to which stakeholder rights are protected, where firms acquire may end up being as important a consideration as what they acquire.

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