Merger And Acquisitions Essay

2668 words - 11 pages


This assignment is compress of part A and B. Part A will be talk about the Mergers and Acquisitions how they can be value creators or value destroyers, defining the meaning of mergers and acquisitions, the motives of mergers and acquisitions.

What is Merger and Acquisitions?
Mergers and Acquisitions are the corporate finance areas of management and strategy that deals with the buying and or joining with another company. In mergers, two or more organisations are join together to become a new organisation and usually changing the name of the organisation and give it a new name. Due to the typically of the similar size of the companies that are involve, the term Mergers of equals is always used. On the other hand, acquisitions is one of the organisations that will be purchase in second and generally a smaller organisation will be absorbed in to the present organisation, or it will run as a subsidiary. Any company which is under consideration by other organisation for a merger or acquisitions is refer as a target. (rechteg 2004).
Motivations of Mergers and Acquisitions;
The dominant rational used to explain Merger and acquisition activity acquiring firms that seek to improved financial performance.
The following motives are considered to improve financial performance.
• Synergy---- refers to the fact that the join companies can often reduce it fixed expenditure by removing the duplicate department or operations to lowering the cost of the company relatives to the same revenue stream to increase the profit margin of the company.(
• Increase market share or revenue---- this refers that the buyer will be absorb a major competitors and this will increase it market power to set prices.(
• Cross selling---- for instance, a bank buy, a stock broker could then sell its banking products to the stock broker customers, while the broker can sign up the bank customer for brakeage account, or a manufacturer can acquire and sell complementary products.(
• Economic of scale--- for example in managerial economies such as the increase opportunity of managerial specialization. Another example is that the purchasing economies increase the order size and associate in bulk buying discount.(
• Geographical---- this is design to silk the earning result of the company over the long term smoothens the stock prices of a company which given conservative investors more confidence in investing in the company. However, this does not always deliver value to shareholders.(
• Taxation--- A profitable company can buy a loss maker to use it target loss as their advantage by reducing their tax liability. In the united states of America and many other countries, the rules are in place to limit the ability of profitable companies to buy loss making companies to limiting the tax motive of the acquiring company.(
• Resources...

Find Another Essay On Merger and Acquisitions

Mergers and Acquisitions: Part I Essay

1251 words - 5 pages Mergers, Acquisitions, and Corporate RestructuringMergers and Acquisitions (M & A) PaperIntroductionMergers and Acquisitions (M&A) is the name given to the process of companies acquiring some other companies or companies merging together with the economic objective of improve their competitive advantage and financial performance by anticipating and adjusting to changes in the marketplace. The history of mergers and acquisitions date back

Mergers and Acquisitions Essay

855 words - 3 pages name and a new stock takes the place of the once two separate companies. Some mergers and acquisitions that can occur when purchasing a company is horizontal, vertical, carve-out, congeneric, and conglomerate mergers and acquisitions.Learn Mergers (2010) defines horizontal mergers as "Two companies competing in the same market merge or join together. This type of merger can either have a very large effect or little to no effect on the market

Mergers and Acquisitions Impacts on Human Resources Practice

873 words - 4 pages . Stimulating and maintaining positive attitude in a company is not an easy task. In merger and acquisition, the challenge is beyond putting two different cultures into one new culture, but it is more managing the impacts against employees’ morale. Often times, Merger and acquisitions follow by layoff. When two companies merger, having two managers in the same division will not make sense because considering the efficiency. In HR practice

Merger and Acquisition Types

1033 words - 4 pages equal sized companies mutually decide to pool their interests to become one jointed organization. Acquisitions occur when companies purchase another and eliminate the existence of the target as an independent entity.Horizontal M&AA horizontal merger is when two companies competing in the same market merge or join together. When two small companies merge horizontally, the results are less noticeable, but these are very common. In a large

Merger and Acquisition Analysis

1047 words - 4 pages equal sized companies mutually decide to pool their interests to become one jointed organization. Acquisitions occur when companies purchase another and eliminate the existence of the target as an independent entity.The decision to merge with or acquire another company is, in principle, a capital budgeting decision. The value of a merger may depend on such things as strategic fits. Accounting, tax, and legal aspects of a merger can be

Newell Company: The Rubbermaid Opportunity

1303 words - 6 pages million in operating income for the combined company.Reading the case analysis, there are many issues that I feel are concerning this merger and I feel that Newell should not process with this merger. First of all, this is a tough and alarming challenge to Newell's capacity to integrate and strengthen acquisitions. How would Newell bring Rubbermaid into the newellization process since they have completely different products? Another question that

When Cultures Collide

1065 words - 4 pages Mergers and acquisitions has become an important part of the American commerce, which communication plays an important role in reducing the negative impacts. While Schweiger agrees that failure to communicate with employees during a merger will increase employee uncertainty and anxiety, he highlights that previous researchers (Napier et al., 1989) did not measure uncertainty nor any of the supposed dysfunctional outcomes said to follow

mergers and acquisitions

1025 words - 4 pages The growth and development of companies through mergers and acquisitions is currently one of the most common businesses extension. Associated with external growth policy, mergers and acquisitions are a means by which companies implement the strategy of specialization, vertical integration or diversification. Mergers and acquisitions have increased considerably in recent years and have become important movements in major groups, but also in

Mergers and aquisitions

779 words - 3 pages and Chanmugun, R (2006). Reconcilable differences: IT and Post-merger integration. Accenture. Retrieve April 24, 2006, from Acquisitions and Joint Ventures. Planning a Business Merger, Expansion or Consolidations Project Planning for the Migration of Technology in Business Mergers. Retrieve April 24, 2006, from http

Recent Organizational Problem in the Banking Industry: Problems with Mergers and Acquisitions

1420 words - 6 pages acquisitions.The SettingIn a real sense, acquiring, merging, partnering, and venturing with third parties can begin with what looks like clear-cut organizing of strategic plans, priorities, people, and finance, but end in disaster. The majority of acquisitions are not truly successful within the target time frame especially when it involves international transactions. When one decides to go the merger and acquisitions (M&A) route, they must

Hewlet Packard/Compaq: The Largest Technological Merger in History

1452 words - 6 pages up with the HP Way (Hoopes, p. 2). The HP Way is a set of values and principle that are used to guide and help shape and became the foundation for the company (Hoopes, pp. 2-3). Literature Review Marks and Mirvis (2011) examine the relationship in the culture of an organization during a merger and acquisition (M & A). A merger and acquisition is known as the consolidation of more than one organization (“Mergers and acquisitions,”). A merger

Similar Essays

Company Merger And Acquisitions Essay

1153 words - 5 pages Companies merge and acquire other companies for a lot of strategic reasons with different degree of success. The success of a merger is measured by whether the value of the acquiring firm is enhanced by it. The impact of mergers and acquisitions on organization can be small and big in other cases. Mergers and acquisitions immediately impact organizations with changes of rights, and ideas and eventually, in practice. There are multiple

Merger And Acquisitions: Why They Sometimes Fa Il

1149 words - 5 pages According to some statistics nine out of ten mergers and acquisitions fail to meet the expectations set forth at the inception of the transaction (Paton, 2007). These failures may include falling short on objectives, financial gains, and integration of technology and companies cultures or management styles. The following paper will document some reasons for failure and their affects on the company's culture, reputation, and financial standing

Merger & Acquisitions Essay

2761 words - 11 pages market share of the newly formed organisation would also be quite high. The company created as a result of the merger would not only have greater value but would benefit the two companies as well.Due Diligence Process:The process companies go through before mergers and acquisitions to verify that the information about the merging or target company is disclosed properly in the financial statements and all other information related to the companies is

Merger And Acquisition Analysis

1165 words - 5 pages when assembling a merger plan and provide examples of their relevance.AccountingThe intent behind mergers and acquisitions is among many things, the enabling of companies to increase their size or market share, recognize cost reduction, improve their access to capital, equipment, labor and industry expertise, which ideally returns increased production levels and revenue. These factors have led many industry participants, both small and large, to