types of mergers and acquisitions pdf

Types of mergers and acquisitions pdf

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An Overview of the Different Types of Mergers & Acquisitions

Different types of Mergers and Acquisitions (M&A)

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There are various forms of the business combination, Acquisition being one of these, wherein, under US GAAP, in an acquisition, before the acquisition, there is an acquiring company, and a target company, and post-acquisition, both the companies still exist but only the acquiring company reports the consolidated balance financial statement including the results of the target company. The target company exists as it used to be before the acquisition, but the ownership changes hands. It might also be true that there would be some level of intervention of the acquiring company in the workings of the target company, however, not so much as we call it a merger in which the target company ceases to exist. Types of acquisition are classified based on the nature of businesses the two companies and are termed accordingly. There can be other classifications as well and will be described in detail in the following section. This is when a company acquires another company in the same business, or industry or sector, that is, a competitor. A real-life example of the same would be Facebook acquiring Whatsapp.

An Overview of the Different Types of Mergers & Acquisitions

From a legal point of view, a merger is a legal consolidation of two entities into one, whereas an acquisition occurs when one entity takes ownership of another entity's stock , equity interests or assets. From a commercial and economic point of view, both types of transactions generally result in the consolidation of assets and liabilities under one entity, and the distinction between a "merger" and an "acquisition" is less clear. A transaction legally structured as an acquisition may have the effect of placing one party's business under the indirect ownership of the other party's shareholders , while a transaction legally structured as a merger may give each party's shareholders partial ownership and control of the combined enterprise. A deal may be euphemistically called a merger of equals if both CEOs agree that joining together is in the best interest of both of their companies, while when the deal is unfriendly that is, when the management of the target company opposes the deal it may be regarded as an "acquisition". Specific acquisition targets can be identified through myriad avenues including market research, trade expos, sent up from internal business units, or supply chain analysis.

Activity has been prevalent in all market sectors, including large, mid and small cap and across all industries, including biotech, financial services, technology, consumer goods and services, food and beverage and healthcare, among others. A merger or acquisition transaction is the combination of two companies into one resulting in either one corporate entity or a parent-holding and subsidiary company structure. Mergers can categorized by the competitive relationship between the parties and by the legal structure of the transaction. Related to competitive relationship, there are three types of mergers: horizontal, vertical and conglomerate. In a horizontal merger, one company acquires another that is in the identical or substantially similar industry eliminating a competitor.

We use cookies essential for this site to function well. Please click "Accept" to help us improve its usefulness with additional cookies. Learn about our use of cookies, and collaboration with select social media and trusted analytics partners here Learn more about cookies, Opens in new tab. There is no magic formula to make acquisitions successful. Each deal must have its own strategic logic. In our experience, acquirers in the most successful deals have specific, well-articulated value creation ideas going in.

Different types of Mergers and Acquisitions (M&A)

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From a hostile takeover to a friendly merger or a strategic alliance — there are many ways companies can combine forces. In this article we look at four of the main types of mergers and acquisitions and provide a mini-case study of a well-known merger that did not turn out as planned. Companies will merge together and acquire each other for a variety of reasons. Here are four of the main ways companies join forces:.

The six types of successful acquisitions

There are five commonly-referred to types of business combinations known as mergers: conglomerate merger, horizontal merger, market extension merger, vertical merger and product extension merger. The term chosen to describe the merger depends on the economic function, purpose of the business transaction and relationship between the merging companies. A merger between firms that are involved in totally unrelated business activities.

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Mergers and acquisition can be categorized according to the nature of merger. Most mergers are simply done when one firm takeover another firm, but there are different strategic reasons behind this decision. In the same way, legal terminology also differs from merger to merger, hence it is important to differentiate and understand the subtle differences. A merger takes place when two companies combine together as equals to form an entirely new company.

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  • Ianina P. 30.04.2021 at 01:18

    The second merger wave began in and continued until the economic downturn in This wave featured many of the same types of horizontal transactions.

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