The Merger And Acquisition Is Considering Acquiring And Merging With Rizzi, Alonge, And Geroux

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Miller Caterini, and Geroux (MGC) is considering acquiring and merging with Rizzi, Alonge, Tremba, and Hahn to form a new company (McGrath, Inc). Before this process can begin, every merger and acquisition is subject to a definitive plan. This plan must detail strategic fit of the two companies describing and measuring the value of their synergies. This value is determined through describing the functions the merger would serve (what new opportunities are provided) and through a pro-forma statement to determine how the companies fit financially. If the deal is either not strategically or fiscally prudent then MCG should seek other opportunities. Assuming the companies present strong synergistic qualities there are a few options that MCG has in acquiring and merging with RATH. In this case MCG has expressed that it plans on acquiring RATH and then consolidating the two companies to form McGrath, Inc. In order to acquire RATH, MCG could acquire RATH with either cash, stock, or a combination of both. Additionally, the time frame can be flexible, if they want to acquire all at once or if MCG prefers to have a “creeping” transaction that takes place over a lover period of time. There are pros and cons to each strategy, which I will detail below in regards to different classes of common stock, RATH’s highly levered capital structure, and finally ownership to the new company.
The first issue I am going to address is the ownership of different classes of stocks and the implications

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