Mechanics of Mergers & Acquisitions
MECHANICS OF MERGERS & ACQUISITIONS Change is ubiquitous in contemporary society, and nowhere more so than in the operations of the large-scale, public corporation. Dramatic changes are underway, not only in the structure of corporate activity in areas such as the nature of work and the nature of organizational form, but also in the product and financial markets and the regulatory environment within which corporations operate.
The depth and rapidity of these changes compel a reassessment of the ability of various governance structures to cope and adapt. Understanding this process will require not only an understanding of the nature of the changes that are underway, but also a reassessment of the paradigms of corporate governance and their ability to inform, respond to, and even shape such change.
As we all know that a business flourishes over time as the utility of its products and services is recognized in the market. For the buyer, with the market changing so rapidly, product development has become a luxury that is not always a viable option. M&A has essentially become an efficient means to enter a new market. Buyers are more than willing to pay premium prices to gain market entry for a product that extends or diversifies their product line. Acquisitions can also expand customer bases, providing a more solid overall corporate business base.
At times the growth process is dominated by certain inorganic processes, symbolized by an instantaneous expansion of work force, customers, and infrastructure resources, which thereby leads to an overall increase in the revenues, and profits of an entity. The concept of Mergers and Acquisitions is a manifestation of this similar inorganic growth process.
In simple words, a ‘merger ' is a marriage between two companies, usually of roughly equal size, although it is quite common to use the word ‘merger ' to include takeover as well. But in market terms ‘Merger ' refers to finding an acceptable partner, determining
The depth and rapidity of these changes compel a reassessment of the ability of various governance structures to cope and adapt. Understanding this process will require not only an understanding of the nature of the changes that are underway, but also a reassessment of the paradigms of corporate governance and their ability to inform, respond to, and even shape such change.
As we all know that a business flourishes over time as the utility of its products and services is recognized in the market. For the buyer, with the market changing so rapidly, product development has become a luxury that is not always a viable option. M&A has essentially become an efficient means to enter a new market. Buyers are more than willing to pay premium prices to gain market entry for a product that extends or diversifies their product line. Acquisitions can also expand customer bases, providing a more solid overall corporate business base.
At times the growth process is dominated by certain inorganic processes, symbolized by an instantaneous expansion of work force, customers, and infrastructure resources, which thereby leads to an overall increase in the revenues, and profits of an entity. The concept of Mergers and Acquisitions is a manifestation of this similar inorganic growth process.
In simple words, a ‘merger ' is a marriage between two companies, usually of roughly equal size, although it is quite common to use the word ‘merger ' to include takeover as well. But in market terms ‘Merger ' refers to finding an acceptable partner, determining