Mergers : Mergers And Acquisitions

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1. Mergers & Acquisitions: Identify some differences between a merger and an acquisition? What are the different types of mergers/acquisitions (for instance, Starbucks purchasing a coffee bean farm would be a what?)? Make sure to provide an example of each type. Identify and explain some defenses to acquisition. What are the financial statement rules with respect to acquisitions? Overview of Mergers and Acquisitions A merger is when two separate companies, Company A and Company B, are joined together and become a completely new organization, Company C. On the other hand, an acquisition is when Company A, a larger firm, buys out or takeovers Company B, a smaller firm. As a result, the companies ' financial statements are then consolidated. In a merger, the two companies consolidate into a new entity that demands for new ownership and organizational/managerial structure. The company will have twice the amount of employees working the same job, and the company can eliminate some positions. For instance, there is no point on having two CEOs, CFOs, and doubled the amount of management positions. However, an acquisition deals with the companies being separate and coming together to complete consolidated financial statements. This allows for overlap in positions, but decisions are typically made by the larger company. Moreover, a merger typically exhibits a friendlier connotation whereas an acquisition denotes hostility through force. Thus, the two terms have come

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