Mergers & Acquisitions (Big focus on AECOM acquisition of URS) Literature review

Mergers & Acquisitions (Big focus on AECOM acquisition of URS) - Literature review ExampleDue to the wake of economic reforms, entities are viewing it discreet to restructure their operations around their principal business activities strategically through acquisition because of their burgeoning exposure to competition from both domestic and international arena. fit in to the be literature, companies engage in intermixrs and acquisitions for myriad reasons. Some of these motives are view as being good since they are aimed at maximizing the shareholders wealth while others merge or acquire others for questionable reasons (Ferris & Petitt 2013).In essence, companies should pursue mergers and acquisitions only if such actions create value. In other words, companies should merge if they are working as a single unit as opposed to working individually offers a greater value. Ferris and Petitts (2013) study established that synergies take three forms namely financial, managerial and ope rating synergies. Financial synergies arise from lower financing cost because big companies have access to a broader and cheaper pool of funds compared to small companies (Malik et al., 2014, p. 528 Koi-Akrofi, 2014, p. 1812). When companies that carry come forward unrelated businesses merge, there is the reduction in risk that makes them increase their debt capacity and enable them to lower their before-tax financing cost. In this context, there is also the aspect of improve financing in the sense that companies facing financial problems may be forced to look for others that are financially stable to acquire them instead of passing game out of business or taking bankruptcy. The merger causes the firm to expand which makes it easily get access to debt and equity financing which was initially beyond its reach. According to an analysis done by the New York University Stern School of Business (2015) and Malik et al. (2014, p. 528) mergers