Managing cross-border transactions-legal framework, strategies and incentives from the participants.

Abstract

Managing a company requires taking actions and decisions every day. As being a legal entity, an abstract conglomerate of assets, contracts, rights and obligations, a company can only act and express intention through its managers.

Whereas the company’s defined object is the purpose and direction for all actions and decisions taken by its managers, every step regarding the execution of the company’s object is in the end conducted by a human being, the manager.

And as such, every action and decision, which is taken by the respective manager does not occur in a perfect rational vacuum, but is surrounded by traits, character, communication skills and experience of the respective manager.

Are those actions and decisions really only surrounded by the individual features and factors of the manager, who takes them? Or might there be connections between management behaviour and the managing individual itself? Based on every-day experience, this question appears not to be easily negated.

Are decisions taken on a fully rational basis or are they influenced by the respective individual’s current situation, history and character? Does this also count for decisions taken in a professional corporate environment? Can professionalism force back subjective traits and characteristics?

Scientific discurs and academic research is dealing with the question of subjective influences to individual decision-making in depth and for a substantial amount of decades already.1 Experiments and field research conducted so far has revealed a broad variety of findings, most of them supporting assumptions and hypotheses around decision-making in fact always being influenced and biased by subjective factors from the sphere of the individual, who takes those decisions.

If there is likely to be an impact of subjective factors to decision-making of managers of companies, the question to follow is, what consequences this might entail for the company and the company’s object. Even more so, if decisionmaking does not concern the daily business-routine only, but touches on untypical, disruptive events in the lifecycle of a company.

One prominent example for such an extraordinary event is the field of Mergers & Acquisitions, which, even though it can be legally conducted in numerous variants, does always substantially and, if conducted successfully, sustainably impact the company’s business model, organisational structure and strategic direction.

The central aim of this Thesis is to analyse the above mentioned questions around subjective influence factors on management decision-making with regard to an M&A event of a company – from the perspective of each participant in a corporate transaction: Seller, Buyer and Target Company.

In order to conduct this analysis in a comprehensive and in-depth scientific manner and with a clear focus on a defined Research Question, a descriptive analysis of the relevant theories will build the fundament of this Thesis. This theoretical fundament comprises of both, the legal aspects, which are of relevance here, as well as a close analytical review of the theories around individual decision-making in the fields of Management strategies and Behavioural Economics. Following the theoretical fundament, real-life examples of management behaviour in transactional scenarios will be analysed, in order to generate assumptions and hypotheses to enhance the answer to the Research Question.

Theoretical focus, as well as the path of analysis used for the empirical data will be explained and defended against challenging options, as necessary.