A survey of factors considered important in merger and acquisition decisions by selected Kenyan based firms

Abstract

Mergers and Acquisitions seem to be a quick fix to business problems, involving the financial health of the firms. The problem is that these marriage's don't seem to last long, they are more polygamous than monogamous, the latter being the ideal. This research project addresses the factors considered important by selected Kenya based firms, from different sectors, countries of origin as well as local ones, when they made Mergers and Acquisitions decisions. These factors were then compared across sectors as well as by the different modes of origin i.e. local visa vis foreign. The study looked at selected firms in seven important sectors of the Kenyan economy that had merged and acquired in the last 10 years. The research instrument used to collect data was a questionnaire with open ended and closed ended questions. Data was analysed using descriptive statistics and presented in tables and graphs for comparisons. The critical factors considered when firms make merger and acquisition decisions were found to be the same regardless of business sector and modes of ownership (local or foreign). These factors from most important to least important were: a perfect fit, to improve business growth and revenues, to consolidate and be more competitive, globalisation, similarity in cpre competence, political factors, cost reduction, research and development, organisational culture and human factors. Further research can be done to find out why cultural and human factors are least important in merger and acquisition decisions and what are the dangers this can cause to the well being of the new firm.