Merger Types with Examples

There are certain benefits that derived from the merger, which would also boost the operations and financial performance of the organization.

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.

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

(a) In a merger agreement, the assets and liabilities of the firm which is being acquired end up being absorbed by the buyers firm. A merger could be the most effective and efficient way to enter a new market without the need of creating

A merger between one firm and another firm that is its supplier is known as a:

Question 1 Several factors have been proposed as providing a rationale for mergers. Among the more prominent ones are (1) tax considerations, (2) diversification, (3)

It is believed that at the root of any business strategic merger is to expand. This expansion could be in the form of a larger operations leveraging resources, enhanced opportunities or too simply unite with another business to reduce expenses. Ford and Volvo explored the option of teaming up in hop of lowering manufacturing cost.

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

For example the AOL company spent 186.2 billion on Time Warner when they merged in 2002 which made it the biggest merger ever. This was an unsuccessful merger as AOL based its model on dial up modems but consumers were switching to broadband. So subscribers ended leaving AOL and within 2 years AOL had about $99 billion wiped off its value. In 2009 the companies were de merged The advantages of merging with a company is you get shared power over the market, and also you make profits from both companies so your money increases.

1. Horizontal Mergers: Horizontal mergers happen when a company merges or takes over another company that offers the same or similar product lines and services to the final consumers, which means that it is in the same industry and at the same stage of production. Companies, in this case, are usually direct competitors. For example, if a company producing cell phones merges with another company in the industry that produces cell phones, this would be termed as horizontal merger. The benefit of this kind of merger is that it eliminates competition, which helps the company to increase its market share, revenues and profits.

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.

One major objective of mergers is to be able to reduce or fully eliminate the weaknesses that may exit in

Mergers and acquisitions can be classified in terms of the direction of the growth. A horizontal merger/takeover is the combining of two firms in the same stage of production, for example Well come Pharmaceuticals merged with Glaxo Pharmaceuticals. This sort of integration takes place to combat competition from the market and secure market domination; to reduce risks and increase financial strength; and to compete in

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