Mergers & Acquisition
Introduction
Mergers and acquisitions (M&A) and corporate restructuring are a big part of the corporate finance world. Every day, Wall Street investment bankers arrange M&A transactions, which bring individual companies to collectively form larger ones. When they 're not creating big companies from smaller ones, corporate finance deals do the reverse and break up companies through spin offs, carve-outs or tracking stocks.
It does not come as a surprise as these actions often make the news. Deals worth hundreds of millions, or even billions, of dollars dictate the fortunes of the involved company’s future.
Meaning of Mergers and Acquisitions
Merger:
Merger is defined as amalgamation. Merger is the fusion of two or more existing companies. All assets, liabilities and the stock of one company stand transferred to Transferee Company in consideration of payment in the form of:
• Equity shares in the transferee company,
• Debentures in the transferee company,
• Cash, or
• A mix of the above modes.
Merger is also defined as combination of two or more companies into a single company where one survives and the others lose their corporate existence. The survivor acquires all the assets as well as liabilities of the merged company or companies. Generally, the surviving company is the buyer, which retains its identity, and the extinguished company is the seller.
Acquisition:
Acquisition in general sense is acquiring ownership in the property. In the context of business combinations, an acquisition is the purchase by one company of a controlling interest in the share capital of another existing company.
Methods of Acquisition:
An acquisition may be affected by
(a) An agreement with the persons holding majority interest in the company management like the members of the board or major
Mergers and acquisitions (M&A) and corporate restructuring are a big part of the corporate finance world. Every day, Wall Street investment bankers arrange M&A transactions, which bring individual companies to collectively form larger ones. When they 're not creating big companies from smaller ones, corporate finance deals do the reverse and break up companies through spin offs, carve-outs or tracking stocks.
It does not come as a surprise as these actions often make the news. Deals worth hundreds of millions, or even billions, of dollars dictate the fortunes of the involved company’s future.
Meaning of Mergers and Acquisitions
Merger:
Merger is defined as amalgamation. Merger is the fusion of two or more existing companies. All assets, liabilities and the stock of one company stand transferred to Transferee Company in consideration of payment in the form of:
• Equity shares in the transferee company,
• Debentures in the transferee company,
• Cash, or
• A mix of the above modes.
Merger is also defined as combination of two or more companies into a single company where one survives and the others lose their corporate existence. The survivor acquires all the assets as well as liabilities of the merged company or companies. Generally, the surviving company is the buyer, which retains its identity, and the extinguished company is the seller.
Acquisition:
Acquisition in general sense is acquiring ownership in the property. In the context of business combinations, an acquisition is the purchase by one company of a controlling interest in the share capital of another existing company.
Methods of Acquisition:
An acquisition may be affected by
(a) An agreement with the persons holding majority interest in the company management like the members of the board or major
Bibliography: Mergers, acquisitions, and corporate restructurings By Patrick A. Gaughan http://www.legalserviceindia.com/article/l381-Mergers-and-Acquisitions.html Indian Management (Journal of All India Management Association) By A V Vedpuriswar http://corporatereporting.aegon.com/2009/annualreport/glossary http://layman-blog.blogspot.com/2010/04/merging-and-acquisitionm-joint-venture.html www.investopedia.com http://www.businessweek.com/