Loro Piana Acquisitions

1. Introduction

1.1 Topic area (problem statement)

70% of Mergers & Acquisitions deals fail to achieve anticipated synergies.

50% of Mergers & Acquisitions reports a overall drop-off in productivity in the first 4-8 months.

47% of acquired company executives leave in the first year (75% leave within the first three years).

23% of all acquisitions earn their internal rate of return.

Only about 50% of all Mergers & Acquisitions transactions actually tend to create value for the acquirers.

Those statistics, generalised to the global Mergers & Acquisitions (from now on, M&A) trade, support a fundamental evidence of the M&A nature: the percentage of acquisitions that not succeed in deliver a considerable value to the acquirer exceeds the 50% of the totality of the deals; furthermore, the effects of the transactions have, the most of the time, a negative impact in terms of value created for the shareholders.

However, although the number of M&A operations concluded in the world in 2012 has fallen if compared with 2011 (28.500 versus 30.000 in the previous year, with a overall decrease in value of 13%), the choice to undertake a strategic decision in this direction is still very popular. The European market, with the set of problems that characterize it, is the most significant example. In fact, in spite of the actual crisis and the uncertainty it has brought to the investors willingness to trade within the Euro zone, remains the market with the higher percentage of M&A deals stipulated in terms of volume (39% of the global market, 25% in terms of value) . In particular, among all the European countries, the Italian market deserve to be analysed more carefully: although the downturn of the market, for which in 2012 it has been signa...

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Ibid.

BAKER, M.J. (2000) Marketing strategy and management, 3rd ed. Houndmills: MacMillian Press LTD, p.55.

JOHNSON, G., WHITTINGTON, R. and SCHOLES, K. (2011) Exploring strategy: text & cases, 9th ed. Harlow: Pearson Education Limited/ Financial Times Prentice Hall, p.7.

WALKER, O.C. et alter (2003) Marketing strategy: a decision focused approach, 4th ed. New York: McGraw-Hill/Irwin, pp.43-44.

SUDARSANAM, S. op.cit., p.3.

SUDARSANAM, S. (1995) The essence of mergers and acquisitions. Hemel Hempstead: Prentice Hall International, p.1.

SUDARSANAM, S. op.cit., p.217-218.

BRADLEY, F. (2002) International marketing strategy, 4th ed. Harlow: Pearson Education Limited, p.310.