Even as the number of mergers increased over the past decade, the funding dedicated to R&D suffered under stringent cost-cutting measures and restructuring
The chemical industry has witnessed significant changes in the recent years. A wave of mergers since the mid-1980s consolidated the industry and led to research on a scale unimaginable to the scientists who worked for firms in the early of 20th century. Prior to the 1990s, M&As were generally pursued only when identifiable business opportunities existed. By contrast, the number of M&As by specialty chemical firms has increased by a factor of four since 1993, and the number of transactions by commodity chemical firms has grown over the same time frame. Even as the number of mergers increased over the past decade, the funding dedicated to research and development (R&D) suffered under tough cost-cutting measures and restructuring. In mid-2003, a group of research directors, technology officers, current and retired CEOs, economists, historians, and analysts gathered at the Chemical Heritage Foundation (CHF) in Philadelphia. Two key questions were put to participants: Is today’s chemical industry mature, with little payoff to be expected from investing in R&D? Has a decade of M&A activity undermined innovation and creativity in the industrial research setting?
Expanding Due Diligence
M&As and JVs are nevertheless fraught with points of failure. In recent studies, economist have found that mergers are often based on faulty evaluation of assets, especially intellectual assets, leading to long-term decline in shareholders returns. A solution is at hand: involve the R&D division in the evaluation of a potential takeover target from an early stage.
Researchers will often be able to identify which firms should be considered for targeted acquisition. Once senior management decides to buy a merger or acquisition, its success hinges on effective use of R&D in each of the four major stages in the transaction: Target identification; due diligence; implementation and integration:
Target Identification: During target identification, R&D can assess the capabilities of the acquired firm’s research, including the researchers (their reputation, experience, culture, and style of working) and the quality and production of the technology itself.
The chemical industry has witnessed significant changes in the recent years. A wave of mergers since the mid-1980s consolidated the industry and led to research on a scale unimaginable to the scientists who worked for firms in the early of 20th century. Prior to the 1990s, M&As were generally pursued only when identifiable business opportunities existed. By contrast, the number of M&As by specialty chemical firms has increased by a factor of four since 1993, and the number of transactions by commodity chemical firms has grown over the same time frame. Even as the number of mergers increased over the past decade, the funding dedicated to research and development (R&D) suffered under tough cost-cutting measures and restructuring. In mid-2003, a group of research directors, technology officers, current and retired CEOs, economists, historians, and analysts gathered at the Chemical Heritage Foundation (CHF) in Philadelphia. Two key questions were put to participants: Is today’s chemical industry mature, with little payoff to be expected from investing in R&D? Has a decade of M&A activity undermined innovation and creativity in the industrial research setting?
Expanding Due Diligence
M&As and JVs are nevertheless fraught with points of failure. In recent studies, economist have found that mergers are often based on faulty evaluation of assets, especially intellectual assets, leading to long-term decline in shareholders returns. A solution is at hand: involve the R&D division in the evaluation of a potential takeover target from an early stage.
Researchers will often be able to identify which firms should be considered for targeted acquisition. Once senior management decides to buy a merger or acquisition, its success hinges on effective use of R&D in each of the four major stages in the transaction: Target identification; due diligence; implementation and integration:
Target Identification: During target identification, R&D can assess the capabilities of the acquired firm’s research, including the researchers (their reputation, experience, culture, and style of working) and the quality and production of the technology itself.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Prof. Rajita Chaudhuri's Website
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IIPM's Management Consulting Arm-Planman Consulting
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IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
IIPM B-School Detail
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Prof. Rajita Chaudhuri's Website
domain-b.com : IIPM ranked ahead of IIMs
Arindam Chaudhuri's Portfolio - he is at his candid best by Society Magazine
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
IIPM B-School Detail
