Merger and Acquisition: Current Issues

In regards to acquisitions, it is important to distinguish between mergers and acquisitions. In a merger, two companies come together and create a new entity. In an acquisition, one company buys another one and manages it consistent with the acquirer’s needs. An acquisition that involves integration has greater staffing implications than one that involves separation (Rizvi, 2008). A combining of companies is a major change. Mergers and acquisitions represent the end of the gamut of options companies have in combining with each other. It is the mergers and acquisitions that are the combinations that have the greatest implications for size of investment, control, integration requirements, pains of separation, and people management issues

First, research was conducted for a total of 8 quarters (Q4 2012 to Q3 2014, Exhibit 0) based on publicly available information. The ERC analysis requires each bank’s alpha and beta, estimated by regressing the CAPM Model (Exhibit 1) using a period of 200 trading days before Q4 2012, which are then used to estimate the expected daily return for each equity in a 7-day window (day -3 to day +3) around each earnings announcement date (Exhibit 2). Each quarter’s cumulative abnormal returns, is regressed over unexpected earnings to arrive at the ERC (Exhibit 3). Secondly, forecast error, a measure of analyst accuracy, was determined by unexpected earnings and calculated as the difference between actual earnings per share (EPS) and estimated EPS divided by the stock price three days prior to the earnings announcement. In addition to mean and the median of these errors, standard deviation (SD) was used as a measure of volatility, for both the consensus among analysts revising recommendations and the relative number of analysts agreeing/disagreeing (numeric rating of 1 for sell and 5 for strong buy).

The impact that financial analysts have on the share prices of publicly held companies has come under increasing scrutiny. However, despite the role they play in the financial markets, surprisingly little is known about the way in which analysts evaluate companies', report financial information or how they assess the quality of companies' earnings. We surveyed 34 financial analysts across 18 industries to address two issues in tandem - their use of financial information and their

Look up at the sky, it's a bird, it's a plane, no it really is a plain. All across the United States and all over the world there are a number of companies that are constantly seeking to expand each by a number of different means; some companies are going public, others are buying assets from other companies, and some companies are merging. Mergers happen every day whether we realize it or not there are a number of different smaller companies out there that either by or acquire another company's assets or acquire the whole company itself. The whole merger process can be complicated and also can be quite simple one company seeks to expand and another cease to liquidate some assets, the reasons for this are as different as each company. One

Investors and analysts have a tendency to rely too heavily on the record of past earnings growth (La Porta et al. 1997). According to Lakonishok, Shleifer & Vishny (1994) popular strategies like 'extrapolating past earnings growth too far into the future' or 'assuming a trend in stock prices', 'overreacting to good or bad news', or 'simply equating a good investment with a well-run company

The relationship between published financial or accounting information and capital market is a complex one. The capital market is affected by analyst’s forecasts and expectations putting pressure on companies to adjust their reported earning numbers. Share prices are affected by the way corporate profits and balance sheet data

Consolidation: A consolidation will create a new company. Stockholders of both companies must approve the consolidation, and after for this, they can receive common equity shares from the new

CHAPTER 5 The Information Approach to Decision Usefulness 5.1 5.2 Overview Outline of the Research Problem 5.2.1 Reasons for Market Response 5.2.2 Finding the Market Response 5.2.3 Separating Market-Wide and Firm-Specific Factors 5.2.4 Comparing Returns and Income 5.3 The Ball and Brown Study 5.3.1 Methodology and Findings 5.3.2 Causation Versus Association 5.3.3 Outcomes of the BB Study 5.4 Earnings Response Coefficients 5.4.1 Reasons for Differential Market Response 5.4.2 Implications of ERC Research 5.4.3 Measuring Investors’ Earnings Expectations 5.4.4 Summary 5.5 5.6 Unusual, Non-recurring and Extraordinary Items A Caveat About the “Best” Accounting Policy

In any merger, or acquisition for that matter, it can be extremely difficult. In a lot of cases mergers often fail to produce the anticipated gains.

Merger and acquisition is a corporate strategy entailing the selling, buying, and combining or dividing business entities in a bid to facilitate rapid recovery or growth. A merger is distinguished from an acquisition in the sense that an acquisition entails a take-over. A merger involves a combination of business assets of two companies forming an entirely new one ADDIN EN.CITE Mehnert2008259(Mehnert, 2008)2592596Mehnert, M.Negotiation: Definition and Types, Manager's Issues in Negotiation, Cultural Differences and the Negotiation Process2008Santa Cruz, CA 95060Hammer, Patrick, Tanja Hammer, Matthias Knoop, Julius Mittenzwei, Georg Steinbach u. Michael Teltscher. GRIN Verlag GbR9783640183234http://books.google.co.ke/books?id=CoeiECIdYUsC( HYPERLINK l "_ENREF_1" o "Mehnert, 2008 #259" Mehnert, 2008). In this paper Mergers, acquisition and international strategies are discussed looking at two companies: American Airlines Group Inc and American Media Inc. the paper discusses these companies looking at the strategies they have deployed in their operations and the possible gains for such strategies.

a) b) c) d) e) Definition of mergers & acquisitions.............................................................................................3 Classification of mergers & acquisitions......................................................................................5 The merger & acquisition process ................................................................................................6 Why do firms engage in merger & acquisition transactions? ...................................................8 The development of mergers & acquisitions.............................................................................10

Through disclosure, there are several effects the management wants to reach. First, managers often issue earnings forecasts to reduce information asymmetry and therefore influence their firm's stock price (e.g., Nagar et al. 2003). Second, managers' forecast, particularly when they involve bad news, is aimed at avoiding litigation or at least minimizing the cost of subsequent litigation. Field et al. (200S) find that preemptive bad-news forecasts are useful in deterring certain types of lawsuits. Third, analysts update their forecasts in response to firms' earnings forecasts and recent evidence suggests that approximately 60 percent of analysts revise their forecasts within five days of management guidance (Cotter et al. 2006). Kim and Verrecchia (1994)

World Investment Report shows that cross-border M&A increased from 1990-2005. However, it began to decrease from 2008 regarding quantity and value due to the global economy crisis in 2008. However, according to world investment report of 2009 cross-border mergers and acquisitions has been increasing in some region by 2010, especially in Asian countries such as India.

With respect to growing companies, researchers have presented evidence that KMK Investments overconfidence in their earnings forecasts and their high estimated growth rate of earnings lead them to overemphasize the impact of good news and to underestimate the negative value implications of bad news. This may be the reason that the portfolio was

Based on the broad sample, distinct wave periods were identified. A simple wave identification method was employed based on common characteristics associated with M&A waves. M&A waves are described as periods beginning with low M&A activity, which sharply increases before reaching a peak level, followed by a fall in M&A activity (Popli and Sinha, 2014; Hou et al, 2015; Haleblian et al, 2012). The broad sample was organized in terms of the total number of deals announced on a yearly basis from 1990-2014 as seen in Graph 1a. A trend line was imposed which illustrated two wave