A Merger Is A Combination of Two Companies Into One Larger Company

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A Merger is a combination of two companies into one larger company.

An Acquisition, also known as takeover , is the buying of one


company(the target) by another. An Acquisition can be friendly or hostile.

DIFFERENCE BETWEEN MERGER AND ACQUISITION


MERGER
i.Merging of two organization in to one. ii.It is the mutual decision. iii.Merger is
expensive than acquisition(higher legal cost). iv.Through merger shareholders
can increase their net worth. v.It is time consuming and the company has to
maintain so much legal issues.
ACQUISITION
i.Buying one organization by another. ii.It can be friendly takeover or hostile
takeover. iii.Acquisition is less expensive than merger. iv.Buyers cannot raise
their enough capital. v.It is faster and easier transaction.
Types of mergers
Horizontal Merger
Vertical merger
Co-generic merger
Conglomerate merger
1. Horizontal Merger
This kind of merger exists between two companies who compete in the same
industry segment. The two companies combine their operations and gains
strength in terms of improved performance, increased capital, and enhanced
profits.
VerticCo-generic Merger
A type of merger where two companies are in the same or related industries but
do not offer the same products.
An example of a co generic merger is Citigroup's acquisition of Travelers
Insurance. While both were in the financial services industry, they had different
product lines
.

Conglomerate Merger
Conglomerate merger is a kind of venture in which two or more companies
belonging to different industrial sectors combine their operations.al 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 Merger
A type of merger where two companies are in the same or related industries but
do not offer the same products.
An example of a co generic merger is Citigroup's acquisition of Travelers
Insurance. While both were in the financial services industry, they had different
product lines
.Conglomerate Merger
Conglomerate merger is a kind of venture in which two or more companies
belonging to different industrial sectors combine their operations..

Why Mergers and Acquisitions Fail?

Cultural Difference
Flawed Intention
No guiding principles
No ground rules
No detailed investigating
Poor stake holder outreach
WHY IS IMPORTANT
i.Increase Market Share. ii.Economies of scale iii.Profit for Research and
development. iv.Benefits on accountIncreased market share. ii.Increased speed
to market iii.Lower risk comparing to develop new products. iv.Increased
diversification v.Avoid excessive competition

PROBLEM WITH MERGER


i.Clash of corporate cultures ii.Increased business complexity iii.Employees may
be resistant to change
Inadequate valuation of target. ii.Inability to achieve synergy. iii.Finance by
taking huge debt.

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