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

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    amy2094
    A merger involves combining two companies into one larger company through a mutual decision between the companies. It is more expensive than an acquisition due to higher legal costs. An acquisition occurs when one company buys another and can be friendly or hostile. Acquisitions are less expensive and faster transactions compared to mergers. Mergers and acquisitions allow companies to increase market share, achieve economies of scale, and benefit from research and development through increased size and diversification. However, they also bring risks such as clashes in corporate culture, increased business complexity, and employee resistance to change.

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

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    amy2094
    232 views3 pages
    A merger involves combining two companies into one larger company through a mutual decision between the companies. It is more expensive than an acquisition due to higher legal costs. An acquisition occurs when one company buys another and can be friendly or hostile. Acquisitions are less expensive and faster transactions compared to mergers. Mergers and acquisitions allow companies to increase market share, achieve economies of scale, and benefit from research and development through increased size and diversification. However, they also bring risks such as clashes in corporate culture, increased business complexity, and employee resistance to change.

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    A Merger is a Combination of Two Companies Into One Larger Company

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    A merger involves combining two companies into one larger company through a mutual decision between the companies. It is more expensive than an acquisition due to higher legal costs. An acquisition occurs when one company buys another and can be friendly or hostile. Acquisitions are less expensive and faster transactions compared to mergers. Mergers and acquisitions allow companies to increase market share, achieve economies of scale, and benefit from research and development through increased size and diversification. However, they also bring risks such as clashes in corporate culture, increased business complexity, and employee resistance to change.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    232 views3 pages

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

    Uploaded by

    amy2094
    A merger involves combining two companies into one larger company through a mutual decision between the companies. It is more expensive than an acquisition due to higher legal costs. An acquisition occurs when one company buys another and can be friendly or hostile. Acquisitions are less expensive and faster transactions compared to mergers. Mergers and acquisitions allow companies to increase market share, achieve economies of scale, and benefit from research and development through increased size and diversification. However, they also bring risks such as clashes in corporate culture, increased business complexity, and employee resistance to change.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    of 3

    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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