Mergers and Acquisitions

Submitted by: Submitted by

Views: 378

Words: 7654

Pages: 31

Category: Business and Industry

Date Submitted: 09/21/2012 06:41 AM

Report This Essay



* The phrase mergers and acquisitions (abbreviated M&A) 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 to grow rapidly without having to create another business entity.

* In Business or in Economics a Merger is a combination of two Companies into one larger company.

* Such actions are commonly voluntary and involve Stock Swap or cash payment to the target. Stock swap is often used as it allows the shareholders of the two companies to share the risk involved in the deal.

* A merger can resemble a Takeover but result in a new company name (often combining the names of the original companies) and in new Branding; in some cases, terming the combination a “Merger & quot; rather than an acquisition is done purely for political or marketing reasons.

* In the pure sense of the term, a Merger happens when two firms, often of about the same size, agree to go forward as a single new company rather than remain separately owned and operated. This kind of action is more precisely referred to as a “Merger of equals." Both companies' stocks are surrendered and new company stock is issued in its place. For example, both Daimler-Benz and Chrysler ceased to exist when the two firms merged, and a new company, DaimlerChrysler, was created.


* When one company takes over another and clearly established itself as the new owner, the purchase is called an Acquisition. From a legal point of view, the Target Company ceases to exist, the buyer & quot; swallows & quot; the business and the buyer's stock continues to be traded.

* In practice, however, actual mergers of equals don't happen very often. Usually, one company will buy another and, as part of the deal's terms, simply allow...