State the peter drucker rules for acquisitions, Financial Management

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Peter Drucker gave five rules for acquisitions to be more successful.

  • Contribution e.g. the acquirer can add value to the target organisation other than just providing money.
  • Common core e.g. the two organisations should have common markets, operations or technology for better synergy.
  • Value e.g. the acquirer should value the products of the target organisation.
  • Management covere.g. top management of the acquirer must have the experience to manage the target organisation.
  • Linkage e.g. the management of the acquirer must be able to integrate within two separate companies.

Failure of takeovers and mergers often results from inadequate integration of the companies after the takeover has taken place.

 


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