Advantages And Disadvantages Of Mergers And Acquisitions

Competition is quickly encroaching on SunTrust’s territory. The financial crisis helped rivals gain more presence in SunTrust’s core markets through key acquisitions. BB&T bank, one of SunTrust’s main competitors, recently increased its presence with its acquisition of Florida-based BankAtlantic. This acquisition increased BB&T’s deposit market share to 6th in the Miami market. (BB&T Corporate Profile)

They have been able to generate different sources of revenues through commercial banking, credit card and retail financial services, which separates them from competing with some investment banking companies. The accounts, products and features the company offers sometimes have fees which it is willing to waive. Since the company wants the “share of wallet” of high balanced customers, it will take such actions. This action of course has the potential to deepen relationships. In the article by author Charles Keenen he states, “According to Bancography, a consulting firm in Birmingham, Ala., a customer who has just one product with a bank will stick with that bank for about 18 months, but add even one product - a savings account, perhaps - and the average jumps to four years. Customers with three products will stay with the bank for about 6.8 years.”

Merging with another organization has downfalls of destroying wealth from the merger. Considering the buying price is important when merging, spending too much on the merger will impound the value after the merger. Some mergers do not create wealth so capital is lost through the merger. There is no guarantee of financial gain and every formula considered with focus, just as with an acquisition. The final decision dictated by the variables. One company merging with another company takes the debt and losses of those companies in the new formed company.

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

To maximize the amount of business from each customer, banks bundle banking products. If one holds more than one savings account and multiple loans, he often earns benefits of interest.

On behalf of the management committee, I’d like to express our excitement about the addition of MinaBank to the BankFirst family. We are confident that the acquisition will help to expand our customer base and to increase our profile nationally. Our goal is to merge the abundance of talent and resources to outpace competitors in the ever-changing industry. To achieve this, there will be challenging times ahead that will require all of our patience and endurance in order to ensure the best outcome as we restructure the Minneapolis branches. Unfortunately, the change will result in the elimination of roles in certain areas. We understand the emotional stakes involved with such a change, which is why we want to be transparent throughout the process to lessen any anxiety.

Such companies like Bank of America, Wells Fargo, and J.P. Morgan have been in business long enough to know that acquisitions have both positive and negative repercussions. Bank of America was familiar with similar acquisitions when it acquired, at their own risk, two large failed Texas banks in 1988 and several more in subsequent years. With immediate actions it “played a significant role in stabilizing the banking system,” and overall made Bank of America a stronger financial institution. In its turn, Wells Fargo and J.P. Morgan due to the acquisitions of Wachovia, Washington Mutual and Bear Stearns at the end of 2008 “Wells’ assets had grown 127% over the prior year while J.P. Morgan Chase’s grew 39%.” As we can observe, right after the acquisitions the profit of the companies skyrocketed immediately. All of the companies were satisfied the moment the acquisitions brought them positive results, thereby proving their risk was worth the

The growth of the bank’s revenue for its shareholders, is also as a result of the respect the bank has on delivering quality services, respecting the views of everyone involved in their business, having a leadership system that is easily approachable, being

In this essay I will be addressing the “Too Big To Fail” (TBTF) problem in the current banking system. I will be discussing the risks associated with this policy, and the real problems behind it. I will then examine some solutions that have been proposed to solve the “too big to fail” problem. The policy ‘too big to fail’ refers to the idea that a bank has become so large that its failure could cause a disastrous effect to the rest of the economy, and so the government will provide assistance, in the form of perhaps a bailout/oversee a merger, to prevent this from happening. This is to protect the creditors and allow the bank to continue operating. If a bank does fail then this could cause a domino effect throughout

The sector offers a considerable barrier to new entrants due to the high capital required to establish a new bank. As banking is professional services type required high creditability, strong brand presence is the key obstacle for newcomers.

It is thought that when firms merge, the price paid by the acquiring firm should be fair value, because that firm is going to invest rationally. Yet, under rational investment, the shareholders of the acquired firm would never sell. For them, the uncertainty of new ownership would reduce the value of the holding. In order to accommodate for cashing out "early", the shareholders of the acquired company must be compensated. The acquiring firm therefore must pay an acquisition premium in order to entice the shareholders of the takeover target. The acquisition premium will depend on the specifics of the deal and the companies involved, where the industry is in the business cycle and whether or not the takeover is hostile (Milano, 2011).

Mergers can help with entering emerging markets, cutting costs, and gaining competitive advantages. There is increased pressure for publicly traded companies to raise their earnings. If it cannot be done inside the company, they might seek to acquire companies to boost earnings. Additionally, the internet and technology advancements have brought about off-shoring of white collar jobs and made merging with competitors easier.

There can be many good reasons for developing and growing your business through a merger or an acquisition. Those benefits may include but are not limited to the following:

As one of the world’s leading banks, with 135,000 employees in more than 50 countries, Barclays plays a significant role, from working with governments on major infrastructure projects to bringing banking to customers in emerging markets. Barclays is made up of two major businesses: Global Retail and Commercial Banking (GRCB) and Investment Banking and Investment Management (IBIM). There strategy is to achieve growth through time by diversifying their profit base making their growth relevant to their customers at all times. This case study will seek to examine the bid and intended acquisition of ABN AMRO, and the early acquisition

Mergers and acquisitions have developed to be a widespread occurrence in modern era. A merger of the size like Adidas-Armani has repercussion for the labor force of these companies transversely to the world. Although the integration of units gives an immense arrangement of significance to monetary issues and the effects, there are still some issues are the most commonly ignored ones such as human resources, financial management, marketing, sales etc.. Ironically studies confirm that the majority of the mergers not succeed to convey the preferred results because of people associated concerns. The ambiguity resulted by badly handled management issues in mergers and acquisitions have been the foremost grounds for these collapses.