Corporate mergers and acquisitions are quite common these days. In 2004 deals worth over $800 billion were concluded, up 50% from the previous year. This trend is expected to sustain during the rest of the decade.
Basically, mergers and acquisitions are meant for consolidation and growth of a corporation. For instance, a retail chain, which has a strong presence in the East Coast, wants to expand its business to the West. It could either put up its own facilities, which is a time-consuming process, or acquire a large chain or several local chains.
There could be other reasons as well for mergers and acquisitions. A profit-making company could benefit from tax write-off by acquiring one that is running at a loss. Certain mergers and acquisitions complement each other’s capabilities and facilities. A small company with a good product but poor sales could gain by merging with or yielding to acquisition bid by an organization that has a strong marketing setup.
Different types of mergers and acquisitions are resorted to. Sometimes two solid corporations merge to become a much stronger entity. Another is a fledging company merging with a prosperous corporation. We often see subsidiaries being merged with the parent company. There is also a rather rare scenario called ‘reverse merger’ where the parent company merges with a subsidiary. If an Indian company merges with its U.S. subsidiary, it becomes an American company with operations in India.
While many mergers and acquisitions are negotiated, hostile acquisitions also take place. Here the company that is acquiring secretly buys controlling shares of the target company by using third parties.
Several big corporations are constantly in search of potential targets. Financial analysts help them in this process. Printed and electronic directories that provide details of companies, and software that helps to analyze company strengths and weaknesses, are available.
Related Articles of Interest :
-
Merger And Acquisitions Databases
10 August 2010 8:30 PM |
No Comments
Acquisitions let owners establish a base i.e. obtain a going concern in a particular location and establish a niche i.e. bring in more business of a certain type in the market. Acquisitions also help to obtain entry into adjacent market areas and increase the prestige...
-
Mergers And Acquisitions
10 August 2010 8:30 PM |
No Comments
Mergers and acquisitions in the business world are often in the news. For every successful case that is reported, there are several failed moves that may never come to light because of the secrecy that usually shrouds the negotiations. Mergers are slightly different from acquisitions....
-
Merger And Acquisition Strategies
10 August 2010 8:30 PM |
No Comments
It is the inherent desire and need of every business to grow both vertically and horizontally. Organic growth, that is development from within, is often slow and sometimes difficult. That is why there is an increasing trend towards mergers and acquisitions. It could be called...
-
Differences Between Mergers And Acquisitions
10 August 2010 8:30 PM |
No Comments
Although the terms merger and acquisition are often used as though they are synonymous, they mean different things. The differences between a merger and acquisition are important to value, negotiate, and structure a client’s transaction. Mergers and acquisitions both involve one or multiple companies purchasing...
-
Merger And Acquisition Companies
10 August 2010 8:30 PM |
No Comments
Merger and acquisition (M&A) activities seem to be on the increase. Companies who act as consultants and brokers play an important role in this, and ensure smooth and hassle-free deals. It is logical to seek their assistance if you are thinking of thinking of merging...
-
The History Of Mergers And Acquisitions
10 August 2010 8:30 PM |
No Comments
In 1987, Stephen Jaques Stone James merged with Mallesons and they named their new firm as ‘Mallesons Stephen Jaques’. At the time of the merger, Stephen Jaques Stone James was one of the leading Sydney based firms and comprised 79 partners and 251 solicitors and...
-
Mergers And Acquisitions Reports
10 August 2010 8:30 PM |
No Comments
Merger and acquisition reports help companies to track the growth and consolidations of their competitors, prospects, and potential business partners. These reports contain transaction facts and information, which may not be found easily otherwise and can thus benefit companies, which need such information. Merger and...
-
S Corporations
10 August 2010 8:30 PM |
No Comments
An S corporation is a regular corporation with an ‘S corporation’ tax status. This means that this corporation enjoys the benefits of a limited-liability corporation, but can pay income taxes on the same basis as a sole proprietor or a partnership. The other type of...
-
S Corporation Forms
10 August 2010 8:30 PM |
No Comments
An S corporation is a type of corporation that the IRS recognizes. S corporations follow taxation rules that differ from those that regular corporations follow. A main difference is that S corporations are exempt from double taxation. This is because the owner declares the income...
-
Professional Corporate Kits
10 August 2010 8:30 PM |
No Comments
Professional corporate kits are binders that are used by corporations or limited liability companies to keep essential corporate documents to comply with corporate formalities. A professional corporate kit is a professional binder that is enclosed in a matching slipcase and customized with the corporate name...