Advantages And Cons Of Mergers And Acquisition

Mergers and takeovers are forms of external growth within a business. External growth occurs when one firm decides to expand by joining together with another. A takeover specifically refers to the gaining control of a firm by acquiring a controlling interest in its shares (51%). Merger, on the other hand, means the joining with another firm to form a new combined enterprise, shares in each firm are exchanged for shares in the other.

Companies do not have the freedom to merge and acquire as they please do. All have to meet the requirements and essentially be approved by regulatory bodies. In the context of regulations, antitrust laws and security laws are commonly referred to by regulator to determine whether a merger or acquisition should be allowed or rejected. Antitrust laws prohibit mergers and acquisitions that impede competition. The point is very simple where antitrust is referred to as competition. The goal is to increase competition because more competition in economics means that consumers get more at a fairer or lower price. Anytime a regulator believes that a merger or acquisition will make an industry or market less competitive, the business transaction might

A merger is a partial or total combination of two separate business firms and forming of a new one. There are predominantly two kinds of mergers: partial and complete. Partial merger usually involves the combination of joint ventures and inter-corporate stock purchases. Complete mergers are results in blending of identities and the creation of a single succeeding firm. (Hicks, 2012, p 491). Mergers in the healthcare sector, particularly horizontal hospital mergers wherein two or more hospitals merge into a single corporation, are increasing both in frequency and importance. (Gaughan, 2002). This paper is an attempt to study the impact of the merger of two competing healthcare organization and will also attempt to propose appropriate

Downsizing is a strategy to improve an organization’s efficiency by reducing the workforce or changing and restructuring the systems of the organization (Belcourt & McBey, p. 260). There are multiple factors that are forcing Stonewall Industries to make the ultimate decision to downsize. Environmental factors play a vital role in effective Human Resources Management, impacting the strategy of any organization, including the decision to downsize. If Human Resource Planning is not adaptive to relevant environmental

There is the fear that there won’t be synergy or the integration of different organizational designs and cultures might clash. The premium that will be paid is based on future expectations of synergies. If synergy fails, the premium of $6.6 billion dollars will be money lost, so that is cause for concern and have another look at this acquisition. To be able to have a successful merger and acquisition, there are phases that you go through thoroughly to make sure the right decision was reached. In the book Valuation: Measuring and Managing the value of Companies, the authors noted the following (Evans, 2000 P. 7):

A lot of times, company merge to become more competitive . The consolidation of these

Mergers and acquisitions occur because directors see benefits that could come from combining two or more businesses, which could improve the

Market price per share: should be bigger or equal after the merger, which often is not the case.

there are three sorts of mergers: horizontal mergers, vertical mergers and combined. A horizontal merger is an amalgamation between two firms possibly dynamic in similar market at similar level of activity e.g. between two insurance firms whnventory networkile a vertical merger includes firms working at various levels of chain of supply e.g. an insurance firm obtaining a

Mergers and acquisition plays an important role in survival/vitalization of a corporation in today’s market. It continues to be a breakthrough strategy for improving innovation of a company’s product or services, market share, share price etc.

Merger refers to the combination of two or more companies into a single company where one continues to exist, while the other loses to its corporate existence. The survivor acquires all the assets as well as liabilities of the merger company.

Mergers and acquisitions are the right practical choice for accelerating the development cycle for the companies because there are some advantages from broadening and market extension, such as enhancing business performance, increasing profits, and overall shareholders value. However, it may be there some negative impacts on the company. For example, team management can face some obstacles such as culture, legislation and laws and command-and-control. I believe if there are more beneficiaries and less losers then acquisition or merger is ethical model. The potential of failure for merger or acquisition is high; trying to integrate firms with two different cultures, legislation and laws is difficult. For example, if the company merged or acquired with another company in the same field, it is difficult to grow sales because there aren't really new potential customers. The key to growth through merger or acquisitions is a faster, less expensive, and a much less risky

While terms of merger either acquisition are commonly used to define a wide range of transactions, in fact, they are all different according to specific conditions of each. Therefore, researches distinguish M&A activity according to its nature. Amit R. (1989) classifies three main types of mergers on a basis of target firm’s nature: anticipated bankruptcy of a target firm; exceptional performance or high liquidity of a target; and target firm being a remainder of a greater one. However, this generalised classification is not widely adopted by researchers which rather prefer to employ a conventional classification or, to be more precise, they classify and sub-classify M&A by their perspectives.

The downsizing of a company can affect employees before, during and after it occurs. Employees usually know of a possible downsizing, care of the almighty grapevine, months before it is supposed to happen. Thus, employees may become paranoid and self-absorbed, and their top priority is their own career rather than the bottom line of their employer. This causes them to be unfocused and prevents them from performing their jobs efficiently. Many workers would also be perfectly willing to stab their peers in the back in hopes of keeping their job. Usually when a downsizing is complete, the company is at an all-time low. This is due to the fact that in almost every merger, acquisition or downsize, employees are faced with uncertainty about their jobs before and after the restructure. After a large percentage of downsizes, ten percent of the remaining workforce will easily adapt to the change, while another ten percent will never adapt. Workers who survive the downsize often have feelings of anger, fear or distrust. Further internal problems result from employees who survive with the company, but cannot adapt to their new settings and expectations, and eventually quit their job.

In merger: The combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stocks. Two companies become one, decison is mutual. They are not idependent anymore