Business
Merger and Acquisition Considerations
Merger and acquisition considerations involve the strategic, financial, and operational factors that companies evaluate when contemplating a merger or acquisition. These considerations may include assessing the compatibility of corporate cultures, conducting due diligence on the target company, evaluating potential synergies, and addressing regulatory and legal implications. Successful mergers and acquisitions require careful planning and thorough analysis of these considerations.
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9 Key excerpts on "Merger and Acquisition Considerations"
No longer available |Learn more- (Author)
- 2014(Publication Date)
- Library Press(Publisher)
____________________ WORLD TECHNOLOGIES ____________________ Chapter- 3 Mergers and Acquisitions Mergers and acquisitions (abbreviated M&A ) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can aid, finance, or help an enterprise grow rapidly in its sector or location of origin or a new field or new location without creating a subsidiary, other child entity or using a joint venture. The distinction between a merger and an acquisition has become increasingly blurred in various respects (particularly in terms of the ultimate economic outcome), although it has not completely disappeared in all situations. Acquisition An acquisition is the purchase of one business or company by another company or other business entity. Consolidation occurs when two companies combine together to form a new enterprise altogether, and neither of the previous companies survives independently. Acquisitions are divided into private and public acquisitions, depending on whether the acquiree or merging company (also termed a target) is or is not listed on public stock markets. An additional dimension or categorization consists of whether an acquisition is friendly or hostile . Achieving acquisition success has proven to be very difficult, while various studies have shown that 50% of acquisitions were unsuccessful. The acquisition process is very complex, with many dimensions influencing its outcome. Whether a purchase is perceived as being a friendly one or a hostile depends significantly on how the proposed acquisition is communicated to and perceived by the target company's board of directors, employees and shareholders. It is normal for M&A deal communications to take place in a so-called 'confidentiality bubble' wherein the flow of information is restricted pursuant to confidentiality agreements.
eBook - ePubCorporate Finance
A Practical Approach
- Michelle R. Clayman, Martin S. Fridson, George H. Troughton(Authors)
- 2012(Publication Date)
- Wiley(Publisher)
Example 10-1 , such as the forms of payment in a merger, legal and contractual issues, and the necessity for regulatory approval. More important, this chapter aims to equip you with the basic tools for analyzing M&A deals and the companies behind them. In subsequent sections, we will discuss the motives behind business combinations, various transaction characteristics of M&A deals, the regulations governing M&A activity, and how to evaluate a target company and a proposed merger. Section 2 discusses the basic types of mergers. Section 3 examines the common motives that drive merger activities. In Section 4, we consider various transaction characteristics and their impact on different facets of M&A deals. Section 5 focuses on takeovers and the common defenses used to defeat unwelcome takeover attempts. In Section 6, we outline the various regulations that apply to M&A activity. Section 7 explores methods for analyzing a target company and provides a framework for analyzing merger bids. In Section 8, we review the empirical evidence related to the distribution of gains in mergers. Section 9 provides a brief introduction to corporate restructuring activities, and Section 10 summarizes the chapter.2. MERGERS AND ACQUISITIONS: DEFINITIONS AND CLASSIFICATIONSBusiness combinations come in different forms. A distinction can be made between acquisitions and mergers. In the context of M&A, an acquisition is the purchase of some portion of one company by another. An acquisition might refer to the purchase of assets from another company, the purchase of a definable segment of another entity, such as a subsidiary, or the purchase of an entire company, in which case the acquisition would be known as a merger. A merger represents the absorption of one company by another. That is, one of the companies remains and the other ceases to exist as a separate entity. Typically, the smaller of the two entities is merged into the larger, but that is not always the case.Mergers can be classified by the form of integration. In a statutory merger, one of the companies ceases to exist as an identifiable entity and all its assets and liabilities become part of the purchasing company. In a subsidiary merger, the company being purchased becomes a subsidiary of the purchaser, which is often done in cases where the company being purchased has a strong brand or good image among consumers that the acquiring company wants to retain. A consolidation is similar to a statutory merger except that in a consolidation, both
No longer available |Learn more- (Author)
- 2014(Publication Date)
- College Publishing House(Publisher)
_____________WORLD TECHNOLOGIES_____________ Chapter- 3 Mergers and Acquisitions Mergers and acquisitions (abbreviated M&A ) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can aid, finance, or help an enterprise grow rapidly in its sector or location of origin or a new field or new location without creating a subsidiary, other child entity or using a joint venture. The distinction between a merger and an acquisition has become increasingly blurred in various respects (particularly in terms of the ultimate economic outcome), although it has not completely disappeared in all situations. Acquisition An acquisition is the purchase of one business or company by another company or other business entity. Consolidation occurs when two companies combine together to form a new enterprise altogether, and neither of the previous companies survives independently. Acquisitions are divided into private and public acquisitions, depending on whether the acquiree or merging company (also termed a target) is or is not listed on public stock markets. An additional dimension or categorization consists of whether an acquisition is friendly or hostile . Achieving acquisition success has proven to be very difficult, while various studies have shown that 50% of acquisitions were unsuccessful. The acquisition process is very complex, with many dimensions influencing its outcome. Whether a purchase is perceived as being a friendly one or a hostile depends significantly on how the proposed acquisition is communicated to and perceived by the target company's board of directors, employees and shareholders. It is normal for M&A deal communications to take place in a so-called 'confidentiality bubble' wherein the flow of information is restricted pursuant to confidentiality agreements.
eBook - ePubMergers and Acquisitions
The Critical Role of Stakeholders
- Helén Anderson, Virpi Havila, Fredrik Nilsson, Helén Anderson, Virpi Havila, Fredrik Nilsson(Authors)
- 2012(Publication Date)
- Taylor & Francis(Publisher)
This type of situation may influence the acquiring and the target companies' relationships in a radical way. For example, relationships with suppliers and customers of the merging/acquiring companies may be terminated because of the merger/acquisition (Havila and Salmi 2000; Salmi, Havila, and Anderson 2001). On the other hand the companies' relationships may stay unchanged. The reason may be management skills in handling the situation or the view of stakeholders that they need not react if business continues as usual. All in all, this means that a merger or an acquisition is always challenging for management (Bower 2001).As we focus on a context with at least two companies, it will always be necessary to consider stakeholders of the same stakeholder category in both the acquiring and target company. To illustrate the multiplicity and diversity of stakeholder relationships during a merger or an acquisition, we apply a multi-stakeholder approach . We argue that a merger or an acquisition involves several stakeholder groups of both the acquirer and the target company. These stakeholder groups perceive the pro's and con's from their own perspective and thus act and react accordingly. Their stakes are unlikely to be the same. Further, they will probably evaluate the benefits and drawbacks of the merger process, and thus the changing stakes, in different ways.Figure 1.1 A merger or an acquisition involves at least two companies.MERGERS AND ACQUISITIONS: FREQUENT STRATEGIC ACTIVITIES
Although the number of mergers and acquisitions seems to increase and decrease in waves (Martynova and Renneboog 2008; Shleifer and Vishny 1991), they have always been common and frequently studied. For example, according to Cartwright and Schoenberg (2006), an acquisition was made every 18 minutes all year around in 2004. Normally no business day ends without news of a merger or an acquisition in the media. It may be rumours of well-known global companies acquiring shares in each other, or it may emanate from a press conference where the CEO and the chairperson announce a merger. Whether the information is based on facts or just rumours, it still makes the headlines. The reason is simple: few other decisions and actions by shareholders, boards of directors and top management have such an impact on the company's future, on market structure and on shareholder value. Researchers who focus on mergers between two (or more) companies, or on acquisitions where the acquiring company acquires a substantial part of the shares in the target company, often see the merger/acquisition as a strategic step. In this introductory chapter, we present a brief overview of this broad field of research.
eBook - PDFMergers and Acquisitions Security
Corporate Restructuring and Security Management
- Edward Halibozek, Gerald L. Kovacich(Authors)
- 2005(Publication Date)
- Butterworth-Heinemann(Publisher)
They are a strategic option when a com-pany can’t develop new growth, revenue, or capabilities from within, or the cost of doing so is not practical. Mergers and acquisitions have the potential of adding value to companies, in many ways enabling them to accomplish strategic moves such as the following: ● Attain greater market-share and/or reach new markets. Reaching new markets may include expanding the business into international mar-kets thus adding new geographical capabilities What Are Mergers and Acquisitions? 15 ● Create new synergies such as enriching the existing company talent pool with new talent from the acquired or merged company ● Capitalize on efficiencies through economies of scale ● Diversify the existing product line by acquiring additional brands and/or complementary or competitive products It may also help realize improved company infrastructure: ● Through acquisition of new technology ● With the selection and implementation of best practices, business sys-tems, and processes ● Through the expansion of knowledge capital (Knowledge capital is the knowledge and experience possessed by employees.) ● By capturing and protecting existing intellectual property that includes patents, trademarks, copyrights, and proprietary processes and knowledge ● By expanding distribution channels that may provide a competitive edge, as established distribution capabilities and channels may assist a company in reaching new markets, growing its share within the cur-rent marketplace, and help drive down its cost. Use of an acquisition process allows for the immediate use of a capability that otherwise could take years to develop. ● Integrating management experience: This is particularly important to buyers who plan to leave the acquired company as a stand-alone oper-ating business unit. If there is no intention to integrate the acquired company into the acquiring company, having a skilled and experi-enced management team in place is critical.
eBook - PDFRecent Trends in Social and Behaviour Sciences
Proceedings of the International Congress on Interdisciplinary Behaviour and Social Sciences 2013
- Ford Lumban Gaol, Seifedine Kadry, Marie Taylor, Pak Shen Li(Authors)
- 2014(Publication Date)
- CRC Press(Publisher)
1 INTRODUCTION In practice acquisition refers to the procurement of one company by other. The company being bought is known as Target Company and the other is called Acquirer this results in transferring off control of all the assets of Target Company to Acquiring Company. Mergers happen when two or more companies agree to transfer control of their assets to single entity, which may result in birth of new company.There are so many complexities and conflict of interests that it is very hard to identify the Target and Acquirer companies and same holds for Mergers and Acquisitions. In this paper the whole field is addressed as Mergers and Acquisitions (M&A) to avoid potential confusion and unproductive arguments (Agrawal & Jaffe, 2000). In theory the main role of the managers of the any firms is to act in the best interest of shareholders by adapting the strategies and abiding by the mechanism of market for corporate control. In real world this the-oretical concept somewhat fails to materialise when management of the many companies fails to max-imise shareholders wealth it means that they failed to achieve their primary objective. This creates a vac-uum which is usually filled by outsiders via take steps to replace existing management by the process of Mergers & Acquisition. After Mergers or Acqui-sitions share holder of the business tend to revalue their current and future cash flows along with capi-tal gains under new management. The main reason is that market and shareholders expectations are mostly positive. This fact is mostly exploited by the managers for their personal gains. One of the real life examples is the CEO of Merrill Lynch; John Thain spent $1.20 million on decoration of his office while USA’s first family spent one hundred thousand doing same thing (Amel et al., 2004). This opinion is also backed by Denis and McConnell who suggest negative effects of takeovers on NPV, which result in diminishing returns from projects.
eBook - PDF- Philippe Very(Author)
- 2005(Publication Date)
- Wiley(Publisher)
Figure 1.1 sums up what we have said. This analysis leads us to make recommendations that are different 18 The Management of Mergers and Acquisitions Figure 1.1 The seeds of failure. 4 We do not mean that all buyers systematically encounter the same problems. On the contrary, the difficulties vary according to the context of the acquisition, as we will see in Chapter 4. from traditional conclusions. Even if a commendable effort is made to anticipate events, this will not resolve all the difficulties. Obstacles do not arise from a lack of anticipation, but from the difficulty of managing this type of strategic manoeuvre. It is a management problem. Efficient man- agement of the acquisition process would combine the ability to antici- pate events with an ability to react to what cannot or has not been planned. Efficient management of the process would integrate the press- ures of time, the scarcity of information, the importance of the stakes and the human side of the organizations. In the absence of such management, the large amount of work that has to be done, the individual and collective efforts put in, the financial investments committed during the phase of hope, all of these force the buyer to pay a higher price than estimated or to accept unfavourable conditions of purchase. Emotional factors come into play. Irrational elements guide the negotiations on the price instead of ‘‘reasonable’’ valuations. Deficiencies in the conduct of the process may also contribute to neglecting the preparation of the phase of achieve- ments or to forgetting to construct the foundations of this phase in time. In brief, it is essential to ensure continuity in the management of a process that is apparently discontinuous, by monitoring emotions, pressures, uncertainties and discoveries.
eBook - PDF- Cary L. Cooper, Sydney Finkelstein, Cary L. Cooper, Sydney Finkelstein(Authors)
- 2019(Publication Date)
- Emerald Publishing Limited(Publisher)
Keywords: Merger; acquisition; value; values; stakeholder; culture Advances in Mergers and Acquisitions, Volume 18, 125–138 Copyright © 2019 by Emerald Publishing Limited All rights of reproduction in any form reserved ISSN: 1479-361X/doi: 10.1108/S1479-361X20190000018009 126 SALLY RIAD AND URS DAELLENBACH Value is one of the most central concepts in mergers and acquisitions (M&As), but it is also one of the least examined. Not that we lack studies that use the notion of value – indeed these are ubiquitous; rather, it is that a sufficiently broad and systematic examination of value’s various connotations and respective uses has yet to be developed. Value has always had utility for research on M&As: were it not for some understanding of value, then why merge or acquire? Yet there are strong imperatives to re-engage with value in M&As. First, the literature has long recognised that attempts at value creation can result in value destruc-tion ( Haspeslagh & Jemison, 1987 , 1991 ). This observation necessitates explicit engagement with the assumptions and resultant tensions that underpin ‘value’ in M&As, along with articulation of its potentially dissonant meanings. Second, we are witnessing an explosion of interest and passion for inherently interdiscipli-nary approaches, notably through corporate social responsibility and sustainabil-ity, which implicitly question and address a range value(s) ( Busch, Hamprecht, & Waddock, 2018 ) and recognise the growing diversity in management perspectives premised on pluralism. Yet, while these global changes are redefining manage-ment, economies and societies, the theorisation of value in M&As still has a way to go. What is missing is a discussion of the variety in value’s connotations across disciplines, an understanding of why we need these various meanings to intersect, and suggestions towards the latter.
eBook - PDF- Debra C. Jeter, Paul K. Chaney(Authors)
- 2019(Publication Date)
- Wiley(Publisher)
Also, in a stock acquisition, direct formal negotiations with the acquired firm’s management may be avoided. Further, there may be advantages to maintaining the acquired firm as a separate legal entity. The possible advantages include liability limited to the assets of the individual corporation and greater flexibility in filing individual or consolidated tax returns. Finally, regulations pertaining to one of the firms do not automatically extend to the entire merged entity in a stock acquisition. A stock acquisition has its own complications, however, and the economics and specifics of a given situation will dictate the type of acquisition preferred. Other terms related to M&A merit mention. For example, business combina- tions are sometimes classified by method of combination into three types—statutory mergers, statutory consolidations, and stock acquisitions. However, the distinction bet- ween these categories is largely a technicality, and the terms mergers, consolidations, and acquisitions are popularly used interchangeably. A statutory merger results when one company acquires all the net assets of one or more other companies through an exchange of stock, payment of cash or other prop- erty, or issue of debt instruments (or a combination of these methods). The acquiring company survives, whereas the acquired company (or companies) ceases to exist as a separate legal entity, although it may be continued as a separate division of the acquiring company. Thus, if A Company acquires B Company in a statutory merger, the combination is often expressed as A Company B Company A Company Statutory Merger Net Assets of S Company (Assets and Liabilities) 1. Cash 2. Debt 3. Stock 4. Combination of Above Common Stock of S Company What Is Acquired: What Is Given Up: ILLUSTRATION 1-3
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