Merger & Acquisition Strategy
Objective
To explore the strategy of Merger & Acquisition for Development and Expansion of Business.
Introduction
Introduction
The terms merger and amalgamation are synonyms and the term ‘amalgamation’, as per Concise Oxford Dictionary, Tenth Edition, means, ‘to combine or unite to form one organization or structure’.
Merger or an Acquisition in a company sense can be defined as the combination of two or more companies into one new company or corporation.
The main difference between a merger and an acquisition lies in the way in which the combination of the two companies is brought about.
Merger is a process in which negotiation is involved between the two companies prior to the combination taking place. For example, assume that Companies A and B are two Banking institutions.
Company A is an commercial bank with business concentration into financing industrial and corporate sector.
Company B is a banking institution with a big customer base and business portfolio of Housing Loan.
Both companies may consider that a merger would produce benefits as it would make the commercial and domestic customer bases available to the combined company.
The two companies may decide to initiate merger negotiations. If they conclude favorably, the outcome would be a merger of the two companies to form a new larger whole.
In an acquisition the negotiation process does not necessarily take place. In an acquisition company A buys company B. Company B becomes wholly owned by company A. Company B will cease to exist as a separate entity, or company A might retain company B in its pre-acquired form.
In acquisitions the dominant company is usually referred to as the acquirer and the lesser company is known as the acquired. The acquirer buys shares of the acquiring company’s shareholders up to a point where it becomes the owner. Achieving ownership may require purchase of all of the target shares or a majority of them.
Organic Growth –
To explore the strategy of Merger & Acquisition for Development and Expansion of Business.
Introduction
Introduction
The terms merger and amalgamation are synonyms and the term ‘amalgamation’, as per Concise Oxford Dictionary, Tenth Edition, means, ‘to combine or unite to form one organization or structure’.
Merger or an Acquisition in a company sense can be defined as the combination of two or more companies into one new company or corporation.
The main difference between a merger and an acquisition lies in the way in which the combination of the two companies is brought about.
Merger is a process in which negotiation is involved between the two companies prior to the combination taking place. For example, assume that Companies A and B are two Banking institutions.
Company A is an commercial bank with business concentration into financing industrial and corporate sector.
Company B is a banking institution with a big customer base and business portfolio of Housing Loan.
Both companies may consider that a merger would produce benefits as it would make the commercial and domestic customer bases available to the combined company.
The two companies may decide to initiate merger negotiations. If they conclude favorably, the outcome would be a merger of the two companies to form a new larger whole.
In an acquisition the negotiation process does not necessarily take place. In an acquisition company A buys company B. Company B becomes wholly owned by company A. Company B will cease to exist as a separate entity, or company A might retain company B in its pre-acquired form.
In acquisitions the dominant company is usually referred to as the acquirer and the lesser company is known as the acquired. The acquirer buys shares of the acquiring company’s shareholders up to a point where it becomes the owner. Achieving ownership may require purchase of all of the target shares or a majority of them.
Organic Growth –