Mergers and acquisitions: selected epistemological aspects
Selection of modern company development strategies by means of endogenous or exogenous growth, is highly individualised. It is believed, in economic practice, that mergers and acquisitions are a natural way of development for enterprises, which is in turn part of synergy effect. In economy – managem...
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irk-123456789-1309342018-03-09T03:02:43Z Mergers and acquisitions: selected epistemological aspects Miskiewicz, R. Management Selection of modern company development strategies by means of endogenous or exogenous growth, is highly individualised. It is believed, in economic practice, that mergers and acquisitions are a natural way of development for enterprises, which is in turn part of synergy effect. In economy – management theory to be precise – these processes are analysed closely and examined thoroughly. Management theory focuses on these processes and examines them in a broad perspective. Practice shows that concentrations exist, that can lead to industrial conglomerates or establishment of corporations encompassing businesses that are often unrelated. Companies with a holding structure can also be established. The goal of the article it to organise the terminology and definitions from the scope of mergers and acquisitions. Based on theoretical considerations and own business experience, the author defines the role and meaning of knowledge in modern economic processes. Вибір сучасних стратегій розвитку компанії за допомогою ендогенного або екзогенного зростання дуже індивідуалізований. В економічній практиці вважається, що злиття і поглинання є природним способом розвитку для підприємств, що, в свою чергу, є частиною синергетичного ефекту. В теорії управління економікою, якщо бути точним, ці процеси ретельно аналізуються і вивчаються. Теорія управління фокусується на цих процесах і розглядає їх в широкій перспективі. Практика показує, що існують концентрації, які можуть привести до промислових конгломератів або створення корпорацій, що охоплюють підприємства, які часто не пов'язані між собою. Також можуть бути створені компанії з холдингової структурою. Мета статті – сформулювали термінологію і визначення для сфери злиттів і поглинань. На основі теоретичних міркувань і власного ділового досвіду автор визначає роль і значення знань у сучасних економічних процесах. Выбор современных стратегий развития компании посредством эндогенного или экзогенного роста очень индивидуализирован. В экономической практике считается, что слияния и поглощения являются естественным способом развития для предприятий, что, в свою очередь, является частью синергетического эффекта. В теории управления экономикой, если быть точным, эти процессы тщательно анализируются и изучаются. Теория управления фокусируется на этих процессах и рассматривает их в широкой перспективе. Практика показывает, что существуют концентрации, которые могут привести к промышленным конгломератам или созданию корпораций, охватывающих предприятия, которые часто не связаны между собой. Также могут быть созданы компании с холдинговой структурой. Цель статьи – сформулировать терминологию и определения для сферы слияний и поглощений. На основе теоретических соображений и собственного делового опыта автор определяет роль и значение знаний в современных экономических процессах. 2017 Article Mergers and acquisitions: selected epistemological aspects / R. Miskiewicz // Економічний вісник Донбасу. — 2017. — № 4 (50). — С. 147-153. — Бібліогр.: 44 назв. — англ. 1817-3772 http://dspace.nbuv.gov.ua/handle/123456789/130934 334.758:005.21 en Економічний вісник Донбасу Інститут економіки промисловості НАН України |
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Management Management Miskiewicz, R. Mergers and acquisitions: selected epistemological aspects Економічний вісник Донбасу |
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Selection of modern company development strategies by means of endogenous or exogenous growth, is highly individualised. It is believed, in economic practice, that mergers and acquisitions are a natural way of development for enterprises, which is in turn part of synergy effect. In economy – management theory to be precise – these processes are analysed closely and examined thoroughly. Management theory focuses on these processes and examines them in a broad perspective. Practice shows that concentrations exist, that can lead to industrial conglomerates or establishment of corporations encompassing businesses that are often unrelated. Companies with a holding structure can also be established. The goal of the article it to organise the terminology and definitions from the scope of mergers and acquisitions. Based on theoretical considerations and own business experience, the author defines the role and meaning of knowledge in modern economic processes. |
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Article |
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Miskiewicz, R. |
| author_facet |
Miskiewicz, R. |
| author_sort |
Miskiewicz, R. |
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Mergers and acquisitions: selected epistemological aspects |
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Mergers and acquisitions: selected epistemological aspects |
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Mergers and acquisitions: selected epistemological aspects |
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Mergers and acquisitions: selected epistemological aspects |
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Mergers and acquisitions: selected epistemological aspects |
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mergers and acquisitions: selected epistemological aspects |
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Інститут економіки промисловості НАН України |
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2017 |
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Management |
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http://dspace.nbuv.gov.ua/handle/123456789/130934 |
| citation_txt |
Mergers and acquisitions: selected epistemological aspects / R. Miskiewicz // Економічний вісник Донбасу. — 2017. — № 4 (50). — С. 147-153. — Бібліогр.: 44 назв. — англ. |
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| fulltext |
R. Miskiewicz
147
Економічний вісник Донбасу № 4(50), 2017
UDC 334.758:005.21
R. Miskiewicz,
PhD (Economics),
Luma Investment S.A., Poland
MERGERS AND ACQUISITIONS: SELECTED EPISTEMOLOGICAL ASPECTS
Introduction
Selection of modern company development strate-
gies by means of endogenous or exogenous growth, is
highly individualised. It is believed, in economic prac-
tice, that mergers and acquisitions are a natural way of
development for enterprises, which is in turn part of sy-
nergy effect. In economy – management theory to be
precise – these processes are analysed closely and
examined thoroughly. Management theory focuses on
these processes and examines them in a broad perspec-
tive. Practice shows that concentrations exist, that can
lead to industrial conglomerates or establishment of cor-
porations encompassing businesses that are often unre-
lated. Companies with a holding structure can also be
established. The goal of the article it to organise the ter-
minology and definitions from the scope of mergers and
acquisitions. Based on theoretical considerations and
own business experience, the author defines the role and
meaning of knowledge in modern economic processes.
1. Theoretical aspects of mergers and acquisi-
tions
Mergers and acquisitions are an important frag-
ment of the functioning of world economy. They can be
defined as transactions which the companies make to
achieve specific strategic – organisational and finan-
cial – goals. A company that is a part of global market
economy, is affected by internal and external factors
alike, which forces it to develop a specific strategy.
However, the selection of a development strategy by
means of endogenous or exogenous growth, is highly in-
dividualised. Nevertheless, the most important reason
for mergers and acquisitions is the so called synergy ef-
fect. This means that the value of the whole is bigger
than the sum of the two values of respective parts. This
phenomenon is also called the 2+2=5 effect.
The issues of mergers and acquisitions are not
explicitly defined in the economic literature. In the 70s
of the last century, A. Etzionii lead deliberations on the
subject. He stated that respective elements of the eco-
nomy can be subjects to restructuring processes, includ-
ing businesses, departments, the whole national eco-
nomy. He suggested that the subject of reindustrialisa-
tion is narrower and limited only to one fragment of the
national economy – industry. A. Karpiński continued in
similar vein and argued that reindustrialisation means
building and one industrial structure from scratch in or-
der to adapt it to the requirements of the future – to the
generations of technology and internal organisation
which are yet to come. The essence of this new structure
will be replacing humans with machines in the produc-
tion process which will be achieved by restructuring,
meaning an innovative process of reconstruction of the
structure [Etzionii 2006, p. 204 et al.; Karpiński 1992,
p. 154 et al.; Lyashenko, Osadcha, Galyasovskaya,
Knyshek 2017, pp. 20-25; Pająk, Kamińska, Kvilinskyi
2016, pp. 204-217]. On the other hand, H. Dźwigoł and
H. Johnson believe that knowledge and competence of
human resources will become even more important in
modern organisations. In his analyses, H. Johnson be-
lieves that these processes force the following:
• globalisation, which, thanks to ‘reduction of
work cost and the opening of the markets to a larger
number of producers’, has a significant impact from the
perspective of industry competitiveness,
• proceedings of financial markets which ‘have
become more integrated, which in turn allows them to
conduct company merger transactions more easily’,
• privatisation of the state-owned enterprises,
which allows mergers of companies from different sec-
tors, including some, which were unreachable for the
private capital so far,
• danger of recession, which ‘makes competitive-
ness an even more important matter, which results in
measures being taken to eliminat some of the expenses
by the means of consolidation [Johnson 2000, p. 32 et.
al.].
In mergers and acquisitions, the ‘added value’ is a
result of the synergy effect and can originate from vari-
ous sources, both operational (organisational structure,
management styles) and financial [Karpiński 1992, p.
154 et. al.]. What’s interesting from a theoretical point
of view is the specification of the reasons for mergers
and acquisitions, proposed by A. Herdan. She refers to:
limited possibilities of seldom development; threat of
hostile acquisition; improvement of the competitive-
ness. In her understanding, the technical and organisa-
tional causes include: the increase of management effec-
tiveness; acquisition of a more effective leadership;
operational synergy: economy of scale, complementa-
rity of resources and locus, reduction of transaction
costs, benefits of technological integration [Herdan
2008, p. 15]. From the economic point of view, consi-
dering the market and marketing preconditions, it is
worth noting that they correspond with the process re-
lated to the increase of the added value, leading to the
elimination of the competition; complementarity of
products and finally, risk diversification [Evans 2005, p.
22 et. al.; Brzóska 2010, p. 63].
R. Miskiewicz
148
Економічний вісник Донбасу № 4(50), 2017
Financial preconditions for mergers and acquisi-
tions can be noticed in the event of the lack of financial
liquidity and problems in obtaining a loan experienced
by the acquirer. This can be seen in: the use of surplus
funds; increase of debt ability; reorganisation of the in-
vestment portfolio; cash acquisition; reduction of capital
cost; tax benefits; underestimation of the acquired com-
pany; increase of the value of market shares on the ca-
pital market [Herdan 2008, p. 15 et. al.; Kuchlewska
2003, p. 46 et. al.].
Hooke has a slightly different approach to the clas-
sification of the reasons for company mergers. He does
not directly analyse the reasons for the process, but de-
notes the candidates for acquisition which will generate
specific profits for the companies. Therefore, he pro-
poses acquisition of companies along with their distri-
bution channels which is the grounds for the belief that
the acquirer seeks savings in costs. A pursuit for the in-
crease of effectiveness of work, forces the company to
search for candidates with more advanced production
lines. On the other hand, the search for companies in li-
quidation, judicially attached or acquired by own man-
agement boards, suggests that ‘looking for occasions’
may also be the reason for mergers or acquisitions,
which may be the evidence of surplus cash amounts of
a company in mature stage [Hooke 1998, p. 8 et. al.].
P. J. Szczepanowski’s suggestions are also worth con-
sidering. He denotes that the reasons for mergers and ac-
quisitions can be: market related, profit and cost related
or resources and energy as collateral related [Szczepan-
owski 2000, p. 53 et. al.].
Existing literature suggests that there are various
reasons for mergers and acquisitions. Some authors of
analyses and studies, stress the importance of precondi-
tions related to internal situation and offensive strategy
of the enterprises. However, in Polish mill industry, the
dominating reasons are the internal goals to acquire new
capital in order to achieve the synergy effect in the fields
of production, technology, logistics and distribution, as
well as financial liquidity. H. Dźwigoł and H. Mruk em-
phasise the fact that new technologies have lead to the
development of the knowledge economy, in which the
companies are more and more often taking measures to
build an intelligent organisation [Dźwigoł 2015, p. 27;
Mruk 2010, p. 70 et. al.].
The reasons for mergers and acquisitions outlined
above are often objective which is caused by the situa-
tion of the merging companies. Figure 1 shows a gener-
alised algorithm of this situation.
However, there are reasons for mergers and acqui-
sitions that are subjective. These reasons are presented
as proposals derived from the objective analysis of a
business entity. But this does not mean that such reason
isn’t a consequence of company’s needs. Yet it can be
modified by the interest of actuaries, meaning groups
with their own interest in the company (managers,
shareholders, proxies, employees). M. Lewandowski
analyses these groups justly and denotes that they refer
to: growth of leadership salaries; increase of prestige
and power; reduction of management risk; increase of
freedom of action [Lewandowski, Kulpa 1998, p. 23].
Fig. 1. Ways of company development
Source: Own work based on [Frąckowiak 2009].
This means that the managers have the final word
in the process. They have good knowledge of the enter-
prise, therefore the shareholders represented by the Su-
pervisory Board and the employees alike have to take
their opinion into account. In Polish environment, the
representatives of the employees also lean to the leader-
ship’s opinion, since the employees can benefit from a
merger or acquisition heavily, if for example privatisa-
tion of a state-owned company is a direct consequence.
In such case, employees receive 15% of shares of the
company and numerous social and employment guaran-
tees [Jaki 2000, p. 141 et. al.].
P. Sudarsanam had also analysed the reasons for
mergers and acquisitions. He cites growth of the assets
value as the main reason for the process, however he
conditionally treats it as an indirect reason. In the further
perspective, he argues that maximisation of the share-
holders’ wealth may be the base goal, however this goal
may also be distorted by the managers taking actions to
broaden their personal benefits. It is worth mentioning
at this point that most of the mergers in mill industry are
horizontal and the consolidation is grounded in objec-
tive reasons. The abovementioned deliberations about
the types of mergers of enterprises and their relation
with the reasons expressed by the decision-makers,
Ways of
company
development
Internal
development
Expansion of
existing
facilities
Greenfield
investments
External
development
Mergers and
takeovers
Strategic
alliances
R. Miskiewicz
149
Економічний вісник Донбасу № 4(50), 2017
helped define the types of consolidations related to spe-
cific reasons, which are related to objective situations
and decision-makers’ interests alike. However, the lite-
rature does not provide broader research on the reasons
of company mergers linked with the need to acquire new
knowledge. Moreover, it is not always the main explicit
reason for the company mergers [Mierzejewska 2007,
p. 2; Drucker 1994, pp. 119-126; Roberts 2005, Vol. 19
No.3; Penc 2005, pp. 9-10].
Therefore the term mergers and acquisitions used
in theory and in practice is a direct translation of English
terms. The definition describes the forms of conducting
these transactions on an active market with variable in-
tensity, which has been present in these actions for
years. Mergers and acquisitions as universally used
terms, do not represent their legal form, nonetheless
some authors wrongly try to use such interpretations.
The theory of management, which heavily focuses on
the issue, examines it from a broad perspective. It needs
to be emphasised once again that the terms mergers and
acquisitions do not define their legal form, regardless of
the fact whether they are present in various legal sources
and systems. According to this discipline, mergers are
treated as actions leading to a connection of enterprise
organisations in an equal situation where both parties
express consensual initiative. Acquisition is an initiative
of the acquirer towards the acquired.
The nature of these actions, especially acquisitions,
is derivative and regardless of the fact if the acquisition
is hostile or not, or what are the reasons for it. Taking
the formal context of these transactions into account, the
abovementioned explanation facilitates the differentia-
tion of the nature of the transaction for the purposes of
scientific deliberations within the theory of manage-
ment, from its legal nature which is often dependent on
different legal regimes, applicable to entities participat-
ing in such transactions [Cyfert, Krzakiewicz 2013, p.
30 et. al.; Szczepańska-Woszczyna 2016, p. 204 et. al.].
2. Concentrations of entrepreneurs in modern
market economy
Concentrations of entrepreneurs are a natural eco-
nomic occurrence which does not – theoretically – inter-
fere with competition on the market. As a result, entre-
preneurs get the opportunity to strengthen their position
by means of increasing their market share or expanding
their offer with new fragments of the market. Consoli-
dation of business activity may also have positive results
for the functioning of the economy as a whole and con-
sumers, thanks to the increase of availability, innova-
tiveness and diversity of the products. An acquisition or
a merger can also lead to restructuring of unprofitable
entities or be an answer to competition from another
large enterprise with great potential [Podczarski 2016,
p. 63 et. al.].
Economic literature distinguishes two main groups
of actions taken by enterprises that are aimed at concen-
tration. These are mergers (consolidations) of enter-
prises and acquisitions [Merges 2015, p. 4]. The goal of
consolidations of enterprises it to make one out of two
or more. Mergers and incorporations are examples of
these process. Acquisitions on the other hand result in a
transfer of control over a business entity to another en-
terprise. These transfer has two dimensions. Firstly it
applies to the control of the company’s activities, sec-
ondly the control of the company itself.
The requirement needed for a transaction to be
qualified as concentration is the change of control of the
entrepreneur or entrepreneurs, regardless of the fact
whether it is a result of a merger or an acquisition. In
this case the concentration forms include:
• merger (consolidation) – happens when two or
more independent entrepreneurs merge into a new legal
entity (as a result, they lose their former legal entity and
formally cease to exist) or in the event of the capital of
the company (acquired) is transferred to another com-
pany (acquiring) in exchange for shares, which the ac-
quiring company issues to the shareholders of the ac-
quired company (the acquired company ceases to exist),
• control takeover – the entrepreneur gains the
ability to have decisive vote on the business activity
conducted by another, previously independent entity.
Usually happens when the majority stake is acquired,
• establishment of a joint venture – by two or
more independent entrepreneurs who maintain their pre-
vious entities,
• acquisition of a part or of whole capital of an
entrepreneur by another entrepreneur – if the turnover
produced by this capital exceeded 10 million euro in any
of the two years preceding the acquisition [Miśkiewicz
2017, pp. 13 -14].
From the point of view of the structure of the mar-
ket the merging enterprises operate on and their product
and services portfolio, the following types of concentra-
tion can be observed:
• horizontal – transaction between entrepreneurs
who were previously operating in the same business (i.e.
producers of cosmetics for women). It can result in cre-
ation of a new entity with large market power or in
existence of few entities on the market, which cease to
compete and are satisfied with a status quo,
• vertical – transaction between entrepreneurs
who previously operated on different branches of a busi-
ness focused on the same product (i.e. producer and dis-
tributor of paint). In this case, potential threat to compe-
tition may arise in the form of a limited access to pro-
ducts or services offered by the entrepreneur participat-
ing in the concentration, operating on lower or higher
branch of the business,
• conglomerate – transaction between partners
with no vertical or horizontal associations. Products of-
fered by respective partners are often complementary
and consumers buy them for similar reasons (i.e. laun-
dry detergent and softening rinse). Possible conse-
R. Miskiewicz
150
Економічний вісник Донбасу № 4(50), 2017
quences of such concentration include so called tie-in
transactions where purchase of one product is dependent
on the purchase of another, or several products being
sold at attractive prices [Miśkiewicz 2017, p. 14 et. al.;
Borowiecki, Rojek 2006, p. 9 et. al.; Röder 2007, p. 38].
Considering the strategic goals of an enterprise, de-
fensive and aggressive concentrations can be observed.
In view of the reasons for taking actions – strategic and
occasional concentrations, and from the territorial point
of view – domestic and global (supranational). For the
purposes of anti-trust analysis, the first division is the
most important, since the assessment of a concentration
for its effects on the market structure and consumers is
different for distinct divisions [Kaleta 1998, p. 78 et. al.;
Moszkowicz (et. al.) 2015, p. 19 et. al.].
In contrast to vertical and conglomerate concentra-
tions, direct effects of horizontal concentrations – trans-
actions made by competitors operating on the same mar-
ket – include:
• reduction of the number of entities operating on
the market after the concentration,
• Increase of the market share of the acquiring en-
trepreneurs in comparison with the situation before the
transaction.
Additionally, the acquiring company reaches
higher market power which allows it to propose higher
prices (sometimes monopolist). Bigger market concen-
tration creates the possibility to make open or alleged
agreements which breach the competition. These are
however, potential possibilities and the horizontal con-
centration does not always have to threaten competition,
yet it definitely limits it. Unilateral and coordinated ef-
fects are the main concerns when it comes to threats to
competition. The former relate directly to the position of
the entrepreneur, being the result of the concentration.
Thanks to this transaction, the entrepreneur reaches very
high market power which can be used to limit the com-
petition. This power grants him the ability to unilaterally
raise the prices, limit production, reduce the quality or
limit the availability of products and their innovative-
ness. Coordinated effects apply to the change in market
structure. After the concentration, the number of com-
petitors is reduced, which allows the remaining ones to
coordinate their activities in order to achieve more profit
[Miśkiewicz 2017, p. 15].
The competition mechanism is often replaced with
the coordination process. Thanks to the abovementioned
cooperation, the competitors together reach the market
power that allows them to take actions which reduce the
social welfare. Such collective coordination may be a
result of a purposeful or a non-cooperative oligopoly.
Concentrations may lead to large industry con-
glomerates. These are large corporations which often
group unrelated businesses, which in turn means that
they are companies with a holding structure. The goal of
establishing such entities is to benefit from the diversi-
fication and synergy effects. Hollmig, a Finnish con-
glomerate focused on harvesting renewable energy from
waste, industrial services and sea transportation is a
good example [Iwanicz-Drozdowska (eds.) 2007, p. 17
et. al.; Pająk (2013), p. 117 et. Al.].
From the political point of view, the power of such
companies may be important and may in turn threaten
the existence of civil society and contribute to barriers
in the correct functioning of the democratic system.
Existence of economic entities that powerful may have
negative effect on operation possibilities of other entre-
preneurs preventing them from exercising business free-
dom, they are granted. One of the rulings of American
Supreme court is an example of such approach. The
court ruled concentration of two enterprises illegal, be-
cause one of the goals of competition protection is to
protect small, family businesses, even if its occupied by
higher prices for consumers.
Another version of this approach states that the
concentration of enterprises is in fact a mechanism of
wealth concentration which in turn obstructs social bal-
ance.
Considering the abovementioned assumptions, the
transfer of knowledge can apply to mergers and acquisi-
tions alike. The latter, on condition that a true consoli-
dation of enterprises takes place, since only in these con-
ditions a transfer of knowledge can take place. Obvi-
ously, a transfer of knowledge can also take place in si-
tuation where there is no consolidation, however these
are rare cases related to acquisitions of valuable inven-
tions, patents etc. In such case, the acquisition of the
abovementioned goods requires specific organisational
actions. Therefore, on most occasions, when a transfer
of knowledge is mentioned in the context of a merger or
an acquisition, the process is usually followed by organ-
isational actions which lead to a practical consolidation
of the enterprises [Jachnis 2008, p. 83].
3. Horizontal and vertical types of mergers
and acquisitions
Vast economic literature speicfies various types
and forms of merger processes. Analysis of the literature
allows generalisation and a division of the process in the
following base forms: concentration of activities, inte-
gration of actions and coordination. As a result of this
classification several types of mergers where distin-
guished with its number varying depending on the
author’s views. The types of mergers are important for
this article since that is where the problem of knowledge
transfer can be observed. P.J. Szczepankowski distin-
guishes five types of mergers: horizontal, vertical, prod-
uct, conglomerate and geographic [Szczepankowski
2000, p. 12]. H. Johnston on the other hand limits his
division to four types: horizontal, vertical, concentric
combination and conglomerate. [Johnson 2000] Finally
M. Lewandowski et. al. Kulpa consider an even more
limited division into vertical, horizontal and conglomer-
ate integration [Lewandowski, Kulpa 1998, p. 56].
R. Miskiewicz
151
Економічний вісник Донбасу № 4(50), 2017
Knowledge transfer issues usually arise in two
types of enterprises consolidations: horizontal and ver-
tical. A horizontal merger is a consolidation of two or
more companies operating on the same market (busi-
ness), in order to increase overall market share or (and)
create a more profitable enterprise, using combined
know-how, patents and operational processes. The ele-
ments of knowledge enumerated in the definition, di-
rectly defines the role of knowledge transfer in the ho-
rizontal way of consolidation of organisations. Obvi-
ously, horizontal mergers can also take place in different
sectors for diversification purposes, however from the
knowledge transfer point of view, it is much less inte-
resting.
Horizontal mergers, also known as circulation mer-
gers, take place when merging enterprises use the same
distribution channels. They have a specific meaning in
the context of knowledge transfer, since knowledge may
be used, not only in the production area, but also in mar-
keting.
Based on the previous deliberations and analyses,
it can be noted that horizontal mergers are the dominat-
ing type in steel and iron works [Frąckowiak 2009, p.64
et. al.]. Companies from the mill industry are often on
different levels of technical and organisational
knowledge and so the contemplated knowledge ele-
ments (know-how, patents) should definitely be trans-
ferred between the merging enterprises. This phenome-
non is particularly evident in international mergers of
large organisations such as Mittal which acquired and
merged Polish mill enterprises often with more techni-
cally and technologically advanced foreign organisa-
tions.
In the consolidation process, synergy plays a par-
ticularly important role. It can take many forms:
strengthen the market, operational (lower costs thanks
to the economy of scale and combined range), financial
and managerial power. According to Szczepankowski,
the latter gives the company broad complementary be-
nefits such as knowledge transfer in the area of new
managerial techniques and methods on managerial posi-
tions in combined enterprises [Szczepankowski 2000,
p. 34 et. al.]. Vertical type of merger is a situation where
‘the transaction is made between entities being on sub-
sequent links of the added value chain’. Therefore the
benefits from synergy effect and the possibility to cover
the whole technological process, from the acquisition of
resources to the retail sales of the finished product,
should be the main goal [Lewandowski, Kulpa, op. cit.
p. 34]. The assumptions they propose in regard to mer-
gers of related enterprises are complemented by P.K.
Szczepankowski. It is worth noting that in such consol-
idations, knowledge transfer is naturally executed on a
smaller scale than in horizontal mergers. This does not
eliminate the possibility to create knowledge at the con-
fluence of subsequent stages of the process of building
the added value. This phase of knowledge creation is
called combination. It defines the creation of knowledge
in organisations, through transformation of the concep-
tual knowledge into a system of knowledge by means of
combination. Nonake and Takeuchi give an example
where the concept of new product achieved on the com-
bination stage, leads to the creation of a better prototype
[Nonake, Takeuchi 1995, p. 42 et. al.]. This products is
being further transformed to mass production by the
means of stimulation and internalisation. Obviously, in
vertical consolidation of organisations, knowledge com-
bination, which is a part of its transfer, looks slightly
different. It can be observed at the confluence of two
phases of the process of creation of added value, i.e.
between the supplier of mill resources and a processing
enterprise (mill) or the recipients demanding specific
mill product profiles. In this particular case of mill in-
dustry, we encounter a situation where for example, the
knowledge externalised in the enterprise that supplies
the mill industry will be used in combination with ex-
plicit knowledge, which the mill, that the supplier was
merged with, already has. Knowledge transfer can also
be observed in other types of enterprise consolidations
and can be barely traceable. For example an enterprise
acquired by a family business as part of its strategy,
which assumes acquiring related businesses, which may
lead to acquisition of patents. In practise, we see the con-
nection between the reasons for enterprise consolida-
tions and the selection of types of mergers and acquisi-
tions appropriate in specific situations [Lewandowski
1998, p. 76].
After the analysis of the aspects of integration and
the connections between the reasons for consolidation
and executed consolidation form, A. Herdan has cata-
logued the reasons which can be observed in Table 1.
In practice, these actions must have caused changes
in the organisational structure of integrating enterprises.
The changes were taking place in the configuration of
organisational units (groups) due to the assembly of hu-
man resources related with logistics and distribution, as
well as management of integrating enterprises. On one
hand the actions were aimed at broadening the range,
but on the other at slimming the organisational structure,
which on the second stage of integration (creation of
Polskie Huty Stali holding) was extended by one mana-
gerial level. However, actions taken to optimise the de-
cisive processes introduced centralising tendencies,
which in turn resulted in some limitation of the auto-
nomy on lower levels of managerial hierarchy.
Centralisation of some functions (logistics, distri-
bution, R&D) definitely resulted in lowering of fixed
costs and in consequence, in following the strategy
of the merger. However, reinforcing the R&D resulted
in creation of new knowledge i.e. by means of its trans-
fer between the merged organisations. Vertical integra-
tion in mill industry also resulted with some other
changes i.e. in the area of cash flow, however this matter
did not affect the disturbances in the integration of or-
ganisational structures significantly.
R. Miskiewicz
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Економічний вісник Донбасу № 4(50), 2017
Table 1
Connection between the reasons for consolidation and selected form of consolidation
REASONS CONSOLIDATION FORMS
Cost minimisation
Horizontal integration
Global consolidations
Sales maximisation
Vertical integration
Global consolidations
Risk reduction
Conglomerate
Global consolidations
Realisation of adopted strategy
Horizontal integration
Vertical integration
Conglomerate Global consolidations
Control of cash flow
Horizontal integration
Vertical integration
Conglomerate Global consolidations
Source: [Herdan 2008, p. 23].
All the reasons for entering merger and acquisi-
tions transactions contemplated in professional litera-
ture were objective and rooted in the situation of the en-
terprise and strategy derived from it.
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Мішкєвіч Р. Злиття і поглинання: вибрані
епістемологічні аспекти
Вибір сучасних стратегій розвитку компанії за
допомогою ендогенного або екзогенного зростання
дуже індивідуалізований. В економічній практиці
вважається, що злиття і поглинання є природним
способом розвитку для підприємств, що, в свою
чергу, є частиною синергетичного ефекту. В теорії
управління економікою, якщо бути точним, ці про-
цеси ретельно аналізуються і вивчаються. Теорія уп-
равління фокусується на цих процесах і розглядає їх
в широкій перспективі. Практика показує, що існу-
ють концентрації, які можуть привести до промис-
лових конгломератів або створення корпорацій, що
охоплюють підприємства, які часто не пов'язані між
собою. Також можуть бути створені компанії з хол-
дингової структурою. Мета статті – сформулювали
термінологію і визначення для сфери злиттів і пог-
линань. На основі теоретичних міркувань і власного
ділового досвіду автор визначає роль і значення
знань у сучасних економічних процесах.
Ключові слова: злиття, поглинання, процеси ре-
структуризації, управлінська компетентність, рента-
бельність інвестицій, стратегії компанії, інновацій-
ність компанії.
Мишкевич Р. Слияние и поглощение: вы-
бранные эпистемологические аспекты
Выбор современных стратегий развития компа-
нии посредством эндогенного или экзогенного
роста очень индивидуализирован. В экономической
практике считается, что слияния и поглощения яв-
ляются естественным способом развития для пред-
приятий, что, в свою очередь, является частью си-
нергетического эффекта. В теории управления эко-
номикой, если быть точным, эти процессы тща-
тельно анализируются и изучаются. Теория управ-
ления фокусируется на этих процессах и рассматри-
вает их в широкой перспективе. Практика показы-
вает, что существуют концентрации, которые могут
привести к промышленным конгломератам или со-
зданию корпораций, охватывающих предприятия,
которые часто не связаны между собой. Также могут
быть созданы компании с холдинговой структурой.
Цель статьи – сформулировать терминологию и
определения для сферы слияний и поглощений. На
основе теоретических соображений и собственного
делового опыта автор определяет роль и значение
знаний в современных экономических процессах.
Ключевые слова: слияния, поглощения, про-
цессы реструктуризации, управленческая компе-
тентность, рентабельность инвестиций, стратегии
компании, инновационность компании.
Miskiewicz R. Mergers and acquisitions: se-
lected epistemological aspects
Selection of modern company development strate-
gies by means of endogenous or exogenous growth, is
highly individualised. It is believed, in economic prac-
tice, that mergers and acquisitions are a natural way of
development for enterprises, which is in turn part of syn-
ergy effect. In economy – management theory to be pre-
cise – these processes are analysed closely and exam-
ined thoroughly. Management theory focuses on these
processes and examines them in a broad perspective.
Practice shows that concentrations exist, that can lead to
industrial conglomerates or establishment of corpora-
tions encompassing businesses that are often unrelated.
Companies with a holding structure can also be estab-
lished. The goal of the article it to organise the terminol-
ogy and definitions from the scope of mergers and ac-
quisitions. Based on theoretical considerations and own
business experience, the author defines the role and
meaning of knowledge in modern economic processes.
Keywords: mergers, acquisitions, restructuring
processes, managerial competence, investment profita-
bility, company strategies, company innovativeness,
smooth operation practices.
Received by the editors: 20.11.2017
and final form 22.12.2017
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