For the corporation that has acquired another company, merged with another company, or been acquired by another company, evaluate the strategy that led to the merger or acquisition to determine whether or not this merger or acquisition was a wise choice. Justify your opinion.
Step 1. As of the acquisition date, tangible assets and liabilities need to be measured at their fair market value. However, items such as lease and insurance contracts, among others, need to be measured at their inception date.
The main goal of a business combination is business expansion. The process of two or more companies coming together under a common control in order to expand is known as business combination. There are two methods that a company can expand, which are by internal expansion and external expansion. First, internal expansion is the ability to increase business operations without any outside activities, such as advertising and marketing. Secondly, external expansion is when one company overtakes another company in order to be more successful. External expansion can be achieved through vertical integration, horizontal integration, or through a
Often there are assets that do not appear on the balance sheet of the investee; however as per initial measurement guidance all identifiable assets must be measured. According to ASC 805-20-25-10 “An intangible asset is identifiable if it meets either the separability criterion or the contractual-legal criterion described in the definition of identifiable.” This means that if an asset is separable from the entity or arises due to contractual rights, even if it lacks physical substance, it must be recognized at fair market value. Often the value of the entity cannot be seen on a balance sheet and it is important to realize that even if an asset is not in the acquired entities financials but it holds value, there is a distinct possibility that it will meet the separability criterion and thus must be valued at fair market value as of the acquisition date.
In the literature one finds a large number of explanations for the occurrence of mergers and acquisitions. Sometimes, these explana-tions are also applicable to related forms of interindustrial links such as joint ventures or strategic alliances. Therefore it is necessary to define the term merger and acquisition as it will be used throughout this seminar paper.
First of all, the first component when acquiring new firm is the identification and valuation of the target. This component requires a well-defined corporate strategy and focus. Identification stage of the target market typically comes before the identification of the target firm, which highly developed markets offer wide choice of publicly traded companies to select from. Valuation stage
The objective of this part is to analyze the reasons that can lead a firm to M&A operations. Neoclassical economists and strategy experts argue that it improves the competitive position of the firm by exploring the characteristics of the acquired business and its added value, while others are in favor of behavioral theories such as agency theories, hubris, and misvaluation. This part therefore presents the main motivations for merger transactions as well as the improvements that an M&A transaction provide.
An acquisition happens when a purchasing organization acquires over half possession in an objective organization. As a component of the trade, the procuring organization frequently buys the objective organization's stock and different resources, which permits the getting organization to settle on choices in regards to the recently gained resources without the endorsement of the objective organization's investors. Acquisitions can be paid for in real money, in the obtaining organization's stock or a combination of both.
Our topic is a clear example of concentric merger, because the two companies offer different products (bricks and ceramic sanitary ware) to the same customer, the construction market.
The study ‘The Impact of Assets Impairment on Company Accounts’ presents the cotemporary issues facing by major five Australian companies Qantas, Ten Networks, Billabong, Bluescope steel and Harvey Norman. This research mainly deals with controversies surrounding the recent introduction and application of ‘fair value’ measurement system by the IASB and AASB.
Mergers & Acquisitions refers to corporate reorganisations that transfer an organisation’s ownership from one firm, the target, to the other known as the acquirer (Motis, 2007). The difference between a merger and an acquisition is that the former is a combination of two companies, whereas acquisition is when one company completely takeover another (Gupta, 2013.
There is no law that oversees business combination. Organizations engaged in acquisition must generally get the approval of the board of directors for certain significant business changes. In addition, the shareholders of a target company are typically required to give their approval for acquisition (www.enotes.com)
The terms ‘Amalgamation’ or ‘Merger’ and ‘De-merger’ are not defined in the Companies Act, 1956. Chapter V of Part VI of Companies Act comprising sections 390 to 396A contain provisions regarding Compromises, Arrangement and Reconstructions. In the Companies Bill which has been passed by the Rajya Sabha on August 8, 2012, Chapter XV lays down provisions for the same.