Mercedes goes to Motown

The documentary about Mercedes moves to Motown has taught me a lot about the struggles, difficulties and the process of mergers and acquisitions. A merger and acquisition in essence is when companies combine their assets through different financial transactions. A merger is when two companies seek to solve their business problems together and the board of directors of both companies need the shareholders approval vote for the merger to occur. Once this happens both companies become one. An acquisition is one a company acquires a majority stake ownership of the other, the majority stake varies depending on how diluted the ownership is. This does not need to be approved by the shareholders. So why do companies would like to do a merger and acquisition? Why did Mercedes and Chrysler want a deal like this? Well you could say there is two reasons, diversification which is the ability and want to enter a new market or integration which defends or improves their stand on the current market. In this case we can see both. These two companies operated slightly differently, benz is complex, rigid and focused on german and European markets while chryler was focused on the American market , Chrysler structure was flexible allowing for lots of models to be built. Benz was intrigued by Chrysler flexible operations. When the companies merger and idea of merger of equals was questioned by the us, benz insisted that this was still in place but it was quite clear that Chrysler became a German company as that was how it was classified. This case study shows that sometimes a party can hide their true intentions until the very end and when you realise it can be too late. Its important to think thoroughly before a deal of this magnitude is considered if you care about the identity of the company.