Merger and acquisition

Merger and acquisition

• Merger and acquisition are two

different strategies that involve

the
consolidation of companies for
various business purposes

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Definition

• A merger occurs when two

separate entities combine forces to
create a new, joint
organization. An acquisition
refers to the takeover of one entity
by another. The two terms have
become increasingly blended and
used in conjunction with one
another

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USES OF MERGER AND ACQUISITION

• Market Expansion
• Diversification
• Synergy
• Competitive Advantage
• Market Dominance
• Financial Growth
• Tax Benefits
• Entry into New Industries
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Comparison
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Competitive Service
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DifferentTypes of Mergers:

 A horizontal merger - This kind of merger exists between two companies who compete in
the same industry segment.
 A vertical merger - Vertical merger is a kind in which two or more companies in the same
industry but in different fields combine together in business.

 Co-generic mergers - Co-generic merger is a kind in which two or more companies in

association are some way or the other related to the production processes, business
markets, or basic required technologies.

 Conglomerate Mergers - Conglomerate merger is a kind of venture in which two or more

companies belonging to different industrial sectors combine their operatio
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 ADVANTAGES OF
Merger and Acquisition

Synergy and Value Creation

Diversification
Enhanced Competitive
Position
Economies of Scale
Access to Resources
Improved Financial
Performance
Enhanced Brand Value
 Limitations OF
Merger and Acquisition

 Cultural Clashes
 Employee Uncertainty
 Loss of Key Talent
 Focus on Short-Term
Goals
 Loss of Identity
 Decline in
Performance
 Loss of Focus
 Impact of Mergers and Acquisitions Employees:

Mergers and acquisitions impact the employees or the workers the most. It is a well known
fact that whenever there is a merger or an acquisition, there are bound to be lay offs.

Impact of mergers and acquisitions on top level management

Impact of mergers and acquisitions on top level management may actually involve a "clash
of the egos". There might be variations in the cultures of the two organizations.

Shareholders of the acquired firm: The shareholders of the acquired company benefit the
most. The reason being, it is seen in majority of the cases that the acquiring company
usually pays a little excess than it what should.

Shareholders of the acquiring firm: They are most affected. If we measure the benefits
enjoyed by the shareholders of the acquired company in degrees, the degree to which
they were benefited, by the same degree, these shareholders are harmed