(FEB NEWS) The Department of Accounting, Faculty of Economics and Business, Universitas Airlangga, successfully held the Guest Lecture Series #12 featuring Undral Erdenee, CMA, MBA, CPA, Lecturer at Mandakh University, Mongolia. The session, conducted on 21 November 2025, offered an in-depth exploration of mergers and acquisitions (M&A) and how organizations can strategically orchestrate synergies and create long-term value through corporate restructuring.

This academic forum attracted participants from Universitas Airlangga and various universities across Indonesia. Students, lecturers, and early-career researchers joined the event to deepen their understanding of M&A fundamentals, valuation techniques, strategic motives, and the real-world challenges commonly encountered in corporate combinations.

Opening and Event Context
The session was moderated by La Ode Sabaruddin, Ph.D., Lecturer at the Department of Accounting FEB UNAIR. In his introduction, he explains the relevance of M&A knowledge for accounting and finance students, particularly as global businesses pursuing expansion strategies, operational efficiencies, and competitive advantages. He also highlighted the importance of equipping students with analytical and strategic perspectives to interpret corporate combinations in practice.
Undral Erdenee's lecture, titled “Merger & Acquisition: Orchestrating Synergies and Value Creation,” provided a comprehensive overview of how M&A activities shape organizational growth, market positioning, and financial performance.

About the Speaker
Undral Erdenee holds professional designations CMA, MBA, and CPA. Her expertise spans:
• Management accounting in emerging markets
• Financial reporting
• Translation of IFRS 17 Insurance Contracts into Mongolian
• Research on ownership structure, earnings management, and financial performance
• Contributions to USAID-funded programs and authorship of cost accounting resources
Her diverse academic and professional engagements brought valuable international insights to the students of Universitas Airlangga .

Lecture Overview: Understanding Mergers and Acquisitions

1. Merger Concepts and Types
   The lecture begins with foundational definitions and different types of mergers:
   • Horizontal – Firms within the same industry
   • Vertical – A firm and its supplier or customer
   • Congeneric – Related enterprises without direct competition
   • Conglomerate – Unrelated businesses combining, usually offering limited synergy
   A merger involves combining two or more companies, typically of similar size, to form a new entity.
2. Acquisitions
   An acquisition occurs when one company (the acquirer) purchases either:
   • A majority of the target's common shares, or
   • The entirety of its assets
   The acquirer gains control, and no new entity is formed.
3. Strategic Rationale for M&A
   Undral outlined two categories of motives:
   Strategic Goals
   • Market expansion
   • Economies of scale
   • Product/service diversification
   • Eliminating competition
   • Accelerating growth
   • Synergy creation
   Financial Motives
   • Enhancing revenue streams
   • Gaining valuable assets
   • Tax optimization strategies
4. Challenges in M&A
   Despite potential benefits, M&A activities face significant obstacles:
   • Cultural misalignment
   • Employee resistance
   • Integration complexity
   • Overvaluation risks
   • Regulatory pressures
   • Debt burden from financing
5. Distinguishing Mergers and Acquisitions
   Basis Mergers Acquisitions
   Meaning Fusion to form a new company One entity purchases another
   Formation of new firm Yes No
   Purpose Reduce competition, improve efficiency Instant growth
   Relative size Similar-sized companies Acquirer larger than target

Case Studies Presented
Two key case studies illustrated real-world applications:

1. Kraft–Heinz Merger (2015)
   • Deal value: $46 billion
   • Intent: Cost synergies, operational efficiencies, economies of scale
2. Facebook's Acquisition of Instagram (2012)
   • Deal value: $1 billion
   • Instagram: ~30 million users at acquisition
   • Intent: Strengthening mobile presence and reaching younger demographics

Hostile Takeover and Defense Mechanisms
A hostile takeover occurs when the acquirer attempts to gain control without the target's approval.
Defense strategies discussed include:

1. Poison pill – share dilution
2. Greenmail – buying off the bidder
3. White knight – finding a friendly acquirer
4. Stock repurchase – regaining voting control
5. Golden parachute – executive compensation protections
   Case Study: Elon Musk's Acquisition of Twitter
   Participants examined:
   • Offer of $44 billion
   • Twitter's poison pill defense
   • Legal disputes
   • Final acquisition in 2022 and transition to X Corp
   • Operational and cultural transformation post-acquisition

Role of Investment Bankers in M&A
The lecture highlighted their critical involvement:
• Structuring deals and identifying buyers/sellers
• Assisting with defensive tactics
• Conducting business valuation
• Securing acquisition financing (including junk bonds)
• Arbitrage and speculation in takeover targets

Business Valuation Techniques

1. Discounted Cash Flow (DCF)
   Valuing the target based on present value of future free cash flows, adjusted for risk.
2. Market Multiple Analysis
   Using valuation multiples such as P/E or EBITDA from comparable firms.
   A detailed numerical illustration was provided, showing:
   • Step-by-step discounted cash flow estimation
   • Horizon value computation using the Gordon Growth Model
   • Impact of required rate of return (15% vs. 25%) on valuation outcomes

Divestitures
Divestiture mechanisms were also discussed:
• Sell-off – direct sale of subsidiary
• Spin-off – creating a new independent company
• Split-up – breaking the parent into several entities
• Equity carve-out – selling a minority stake via IPO
These provide strategic pathways for restructuring and unlocking shareholder value.

Q&A Session
Participants engaged in an interactive discussion, covering topics such as:
• The ultimate goal of M&A
• Differences between merger types
• Control mechanisms in acquisitions
• Synergy concepts (eg, “2+2=5”)
• Integration challenges
• Hostile takeover definitions
• Valuation methods
• Forms of divestitures

Acknowledgments
The Department of Accounting expresses its sincere appreciation to Undral Erdenee for delivering a comprehensive and insightful session. Our gratitude extends to all participants whose engagement enriched the academic discussion. The organizing committee also acknowledges the support of students and faculty who contributed to the smooth execution of this program.

Access to Materials
Participants who completed the attendance form may access:
• Presentation slides
• Session recording
• Documentation
• Certificate of participation

Materials Link:

https://drive.google.com/drive/folders/1bCmsWgfc2WWPEKPHBlqI5a8t2d-zAXY1?usp=sharing