Subject: Mergers and Acquisitions
Submitted to:
Prof. Dipesh Agrawal Mergers And Acquisition
Synopsis:
Introduction
Definition
What makes Mergers and Acquisitions
Difference between Mergers and Acquisition
Advantages
Disadvantages
Examples
Conclusion
Introduction
Mergers and Acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly without having to create another business entity.
A merger is a combination of two companies to form a new company, while an acquisition is the purchase of one company by another in which no new company is formed.
Definition
The main idea: - “One plus one makes three”. The equation is specially based on Merger or Acquisition. The key principle behind buying a company is to create share holder value over and above that of the sum of the two companies. Two companies together are more valuable than two separate companies together. 1. Acquisition:
An acquisition is the purchase of one company by another company. Acquisitions are actions through which companies seek economies of scale, efficiencies and enhanced market visibility. All acquisitions involve one firm purchasing another - there is no exchange of stock or consolidation as a new company. Acquisitions are often congenial, and all parties feel satisfied with the deal.
Acquisition has become one of the most popular ways since 1990. Companies choose to grow by acquiring others to increase market share, to gain access to promising new technologies, to achieve synergies in their operations, to tap well-developed distribution channels, to obtain control of undervalued assets, and a myriad of other reasons.
So, because of the appeal of instant growth,