Catherine D.

Ollinas BME 2 FSA (2:30-4:00 PM)

BSHM – 4A Prof. Anna C. Del Rosario
WEEK 11 - MODULE

MERGERS AND ACQUISITIONS, STRATEGIC RESTRUCTURING AND

PORTFOLIO MANAGEMENT
MERGERS AND ACQUISITIONS (M&A):
Mergers and Acquisitions (M&A) refer to the process of combining two or more companies into
a single entity through various financial transactions. M&A can take several forms, including
mergers, acquisitions, takeovers, and buyouts. The primary motivations behind M&A include:

1. Growth: Companies often pursue M&A to expand their market presence, increase
revenues, and achieve economies of scale.
2. Synergies: M&A can create synergies that lead to cost savings and operational
efficiencies. This includes cost reductions, increased market power, and shared
resources.
3. Diversification: Companies may seek diversification to reduce risk. By acquiring or
merging with businesses in different industries or markets, they can spread risk across
their portfolio.
4. Access to New Markets: M&A can provide access to new geographic markets,
customer segments, or distribution channels.

M&A transactions can be friendly (when both parties agree to the deal) or hostile (when one
party resists the acquisition). The M&A process involves several stages, including due diligence,
valuation, negotiation, and post-merger integration.
STRATEGIC RESTRUCTURING
Strategic restructuring involves making significant changes to a company's operations,
structure, or financial arrangements with the aim of improving its overall performance
and competitiveness. There are different types of strategic restructuring, including:

1. Operational Restructuring: This focuses on streamlining business

operations, reducing costs, and improving efficiency. It may involve changes in
production processes, supply chain optimization, or workforce reductions.
2. Financial Restructuring: Financial restructuring aims to optimize a company's
capital structure. It often involves managing debt levels, refinancing, and
adjusting the mix of debt and equity to improve financial stability.
3. Organizational Restructuring: Changes in organizational structure,
leadership, and management can help a company adapt to evolving market
conditions or growth strategies. This includes changes in reporting hierarchies,
leadership roles, and business units.

Companies typically undertake strategic restructuring when they face financial distress,
need to adapt to market changes, or want to realign their business with their long-term
objectives.
PORTFOLIO MANAGEMENT
Portfolio management involves managing a collection of investments, assets, or business units
to optimize risk and return. This concept is commonly applied in the context of investment
management, but it can also be extended to business operations. Key aspects of portfolio
management include:

1. Diversification: Spreading investments or business operations across different assets

or markets to reduce risk. Diversification helps protect against significant losses in any
one area.

2. Capital Allocation: Deciding how to allocate resources, such as investment capital or

company resources, among different assets or projects. Effective capital allocation is
crucial for achieving strategic goals.

3. Risk Management: Identifying and mitigating risks associated with various assets in
the portfolio. This includes assessing the potential impact of market changes, economic
conditions, or other factors.

In investment portfolio management, a diversified portfolio might include a mix of stocks,

bonds, real estate, and other assets to balance risk and return. In business operations, portfolio
management can involve deciding which products, projects, or business units to invest in and
which to divest.

All three concepts—M&A, strategic restructuring, and portfolio management—are integral to

corporate strategy, enabling organizations to adapt, grow, and optimize their operations in a
dynamic and competitive business environment.