Advantages Of Mergers And Acquisitions

several factors are influencing merger and acquisition activity. Achieving economies of scale, broadening geographic market coverage, and more effectively competing have helped to create a flurry of acquisitions in the marketplace. In addition, the search for cost reductions through, particularly in the mature market conditions we have in the industry, are being used to offset companies’ inability to grow profit through price increases.

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

They also seek to serve a common market. This type of merger enables the new company to go in for a pooling in of their products so as to serve a common market, which was earlier fragmented among them.

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.

There are numerous companies, which have huge expectation with the Mergers and Acquisitions for creating the value of the business through effective efficiency, large scale of economy, reduction of production and other costs, and synergies. Therefore, it is assumed that largely, this strategy influences the business. However, the impact of Mergers and Acquisitions announcement might affect organisations both positively and negatively.

In this chapter, we first provide coverage of expansion through corporate takeovers and an overview of the consolidation process. Then we present the acquisition method of accounting for business combinations followed by limited coverage of the purchase method and pooling of interests provided in a separate sections.

Mergers and acquisitions have become a growing trend for companies to inorganically grow a business within its particular industry. There are many goals that companies may be looking to achieve by doing this, but the main reason is to guarantee long-term and profitable growth for their business. Companies have to keep up with a rapidly increasing global market and increased competition. With the struggle for competitive advantage becoming stronger and stronger, it is almost essential to achieve these mergers. Through research I will attempt to dissect the best practices for achieving merger success.

When companies combine/merge the whole objective is to gain new opportunities, gain market share, grow the business, to become more innovative and to improve product offerings, utilizing/sharing the existing resources and data. From the case

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

The goals of mergers range from reducing the number of competitors, to access of new products (Belcourt et al., p 330). Statistics show that 80% of new product developments fail (Howells, 2011), partly due to challenges and conflicts with human resources functions. Mergers and acquisitions are the fastest way to enter new markets. “It is estimated that 1/3 of all mergers fail due to faulty integration of diverse operations and cultures,” (Chhinzer, 2013). Therefore, the success of a merger or acquisition lies in the ability to guide, motivate, retain, and effectively use

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.

Once again, “A takeover is when one business buys another business. This tends to be more hostile as the buying business is the main one to benefit.” There are some advantages you can gain from this. Firstly, likewise to merging, there can be international growth. “Businesses can make their services or products available globally by acquiring businesses in various locations internationally. For instance, Belgium brewing company, InBev took over Budweiser for $52 billion in 2008 in order to expand its presence in the U.S. market and create one of the largest consumer beverage companies in the world, according to The Times. Due to the acquisition, profits of the company rose by 11 percent in 2011, according to France 24.” (http://smallbusiness.chron.com/)

Mergers and acquisitions enable the involved companies to benefit from staff reductions thus cutting costs to boost profitability. They also enable the acquirer to gain economies of scale thus improving their purchasing

Mergers and acquisitions (M&A) strategies have been popular among U.S. firms for many years (Hitt, Ireland, & Hoskisson, 2013, p.195). Firms use merger and acquisition strategies to improve on their ability to create more value for all their stakeholders, including shareholders’ (Hitt et al., 2013, p.195). A merger is a strategy through two firms that agree to integrate both of their operations. Although, most mergers that are completed are friendly in nature, acquisitions can be friendly or unfriendly (Hitt et al., 2013, p.196). An acquisition is a strategy through which a firm buys a controlling, 100 percent, or interest in another firm with intent of making the acquired subsidiary business part of their portfolio (Hitt, Ireland, & Hoskisson, 2013, p.196).