Merger & Acquisition
What is Merger and Acquisition (M&A)?
Acquisitions and mergers mostly happen when a company wants to expand in a new territory, but does not have enough expertise to do business over there, or when a company wants to expand into a new business and does not have technologies to produce that new kind of product or service. Merger and acquisition doesn’t require any sort of subsidiary or joint venture. It is a decision taken by the top management of the company meaning it is a corporate level strategy. Merger and acquisition are two different terms. However, the difference between these two terms is kind of confusing and unclear.
Definitions:
Acquisition happens when a company completely takes over another company, and cements itself as the new owner. This purchase makes sure that the targeted company does not exist anymore. In merger, two companies get combine with each other and create a new entity. The two companies won’t remain separately owned and operated.
There are two types of acquisitions, friendly and hostile. In friendly acquisition, the targeted firm wants to be acquired willingly by another company. Hostile acquisition is the opposite. There is no agreement from the targeted firm and acquiring firm strives to get majority of stake. An acquisition can be friendly or hostile depending on how the proposal has been communicated to the target firm and how target firm perceived the proposal. This type of information is highly classified and no third party gets to know about this. Some “improvement in the terms” can be made which can eventually turn a hostile acquisition into a friendly one.
Acquisitions can also be classified as ‘public’ and ‘private’ acquisitions. This type of acquisition is based on whether the target firm is listed in stock exchange market or not. The overall acquisition process is very difficult and complicated, and according to the research, 50% acquisitions have failed.
Most of the time, a small firm gets acquired by a larger
Acquisitions and mergers mostly happen when a company wants to expand in a new territory, but does not have enough expertise to do business over there, or when a company wants to expand into a new business and does not have technologies to produce that new kind of product or service. Merger and acquisition doesn’t require any sort of subsidiary or joint venture. It is a decision taken by the top management of the company meaning it is a corporate level strategy. Merger and acquisition are two different terms. However, the difference between these two terms is kind of confusing and unclear.
Definitions:
Acquisition happens when a company completely takes over another company, and cements itself as the new owner. This purchase makes sure that the targeted company does not exist anymore. In merger, two companies get combine with each other and create a new entity. The two companies won’t remain separately owned and operated.
There are two types of acquisitions, friendly and hostile. In friendly acquisition, the targeted firm wants to be acquired willingly by another company. Hostile acquisition is the opposite. There is no agreement from the targeted firm and acquiring firm strives to get majority of stake. An acquisition can be friendly or hostile depending on how the proposal has been communicated to the target firm and how target firm perceived the proposal. This type of information is highly classified and no third party gets to know about this. Some “improvement in the terms” can be made which can eventually turn a hostile acquisition into a friendly one.
Acquisitions can also be classified as ‘public’ and ‘private’ acquisitions. This type of acquisition is based on whether the target firm is listed in stock exchange market or not. The overall acquisition process is very difficult and complicated, and according to the research, 50% acquisitions have failed.
Most of the time, a small firm gets acquired by a larger