Global mergers and acquisitions

Global mergers and acquisitions (M&A) hit new highs in 2021-breaking prior records by a long shot. The number of announced deals exceeded 62,000 globally in 2021, up an unprecedented 24% from 2020. Publicly disclosed deal values reached all-time highs of US$5.1tn-including 130 megadeals with a deal value greater than US$5bn-a whopping 57% higher than in 2020 and smashing the previous record of US$4.2tn set in 2007. The often-frenzied M&A activity in 2021 was fuelled by intense demand for technology, and for digital and data-driven assets, and the pent-up deal-making demand from 2020 that was unleashed. At the outset of the pandemic, efficient operations and access to capital helped many large corporations fare better than their smaller, less-well-capitalised competitors. One might conclude this will lead to further consolidation, as companies use M&A to gain the advantages of size and scale. However, a number of large established corporations, including IBM, Daimler, General Electric, Johnson & Johnson and Toshiba, have recently announced demergers or divestitures, effectively doing the opposite-breaking up their business. A. Identify and briefly describe two benefits and drawbacks of demergers? (5 marks) B. Identify and briefly describe two planning considerations as companies plan for a demerger? (5 marks) C. Identify and briefly describe 5 HR issues that would need to be considered for the implementation of the demerger? (10 marks)