Risk Management in Enterprise Merger and Acquisition (M&A): A Review of Approaches and Best Practices
Abstract
Risk management is a cornerstone of successful enterprise mergers and acquisitions (M&A), addressing uncertainties and challenges that can significantly impact outcomes. This paper reviews contemporary approaches and best practices in risk management for M&A activities, focusing on financial, operational, strategic, regulatory, and cultural risks. This paper explores the multifaceted risks associated with M&A and presents strategies to manage these uncertainties effectively. Key frameworks such as the Fishbone Method for risk identification and the Fuzzy-AHP Method for risk quantification are examined. Additionally, the study discusses the historical evolution of M&A in distinct waves and highlights different types of mergers and acquisitions, including horizontal, vertical, and conglomerate forms. The analysis emphasizes the importance of structured risk management models and best practices, such as due diligence and alignment of organizational cultures, to maximize the probability of success in M&A transactions. By addressing these risks systematically, organizations can leverage M&A to achieve sustainable growth and competitive advantage.
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