Please enable JavaScript.
Coggle requires JavaScript to display documents.
Merger, Takeover and Acquisition (Types of merges (Horizontal merger-…
Merger, Takeover and Acquisition
-
The differences
-
- Takeover- any activities in which a control of a business entity changes hand or is taken over by an entity
- Merger- the combination of two or more firm, which is from resulting firm, maintains the identity of one of the firms
Types of merges
- Horizontal merger- merger of two in the same line business attempt to gain efficiencies of scale/scope and benefit from increased market power
- Vertical mergers- merger in which a firm acquires a supplier or a customer, enrich product lines
- Congeneric merger- merger in which one firm acquires another firm that is in the same general industry but neither in the same line of business not a supplier or a customer
- Conglomerate merger- merger combining firms in unrelated businesses
Reason for mergers
- Financial Motives
.through mergers, the bidding firms can enjoy a potentially desirable portfolio risk reduction while maintaining the firm
.Through mergers, the merged firms will be in a better position for raising much needed capital through
- Non-financial motives
.Business Expansion- firms that aim to expand their business activities
.Guaranteed sources of funding- by merging with more liquid assets and low liability company.Greater market Accessibility- merging also enable firms to have greater access to the international.Synergy- economies of scale resulting from synergy of the combined firms either in the same line of business
Strategic of synergy
- Operational synergies
.Most likely to be achieved in horizontal mergers
. Economic of scale
.When size is increase will affect the operating cost to reduce that allow reduction. Resources complementarities
.A merger firms will be have operational expertise is different area
- Managerial synergy
. Cause 2 firms to have greater value when combined that when they are independent that efficiency gains from the combination of management teams and aries when different strengths are paired together
- Financial synergy
. A merger result in less-volatile cash flows, lower default risk and lower cost of capital
-