Mergers , Acquisitions & Takeovers Flashcards
occurs when two companies combine into one entity
Merger
occurs when a buyer acquires all or part of assets or business of a selling entity, and where both parties are actively assisting in the purchase transaction.
Acquisitions
Types of Merger:
- Horizontal merger
- Vertical merger
- Conglomerate merger
- Concentric merger
- Statutory merger
- Subsidiary merger
- Consolidation merger
merger that happens between
companies belonging to the same
industry.
Horizontal merger
The companies have businesses
in the same space and are generally
competitors to each other.
Horizontal merger
A merger occurring between
companies producing similar
products, goods and offerings similar services.
Horizontal merger
A merger between two companies
producing different goods and
services for one specific finished
products.
Vertical merger
The companies operate at different levels in the supply chain of the same industry.
Vertical merger
a merger between companies that produce different goods or offer different services for one common
finished product.
Vertical merger
is between companies with totally nothing in common.
pure conglomerate merger
is between companies looking for market or product extensions.
mixed conglomerate merger
is the merging of firms that
operate in the same industry but do not have a mutual relationship (such as a buyer-sellerrelationship).
CONCENTRIC MERGER
often called a congeneric merger
CONCENTRIC MERGER
A merger of firms which are into similar type of business.
CONCENTRIC MERGER
one in which all the assets and liabilities of the smaller company is acquired by the bigger (acquiring) company. As a result, the smaller target company loses its existence as a separate entity.
STATUTORY MERGER
This happens because the
target company may have a known brand or a strong image which would make sense for the acquiring company to retain. Company A + Company B = (Company A + Company B)
SUBSIDIARY MERGER
one in which the target company becomes a subsidiary of the bigger
acquiring company.
SUBSIDIARY MERGER
This is generally the case with both
the companies being of the same size.
CONSOLIDATION MERGER
one in which both the companies lose their identity as separate entities and become a part of a bigger new company
CONSOLIDATION MERGER
Ways of merger – A merger can take
place in following ways:
❖ By purchasing of assets
❖ By purchase of common shares
❖ By exchanging of shares for assets
❖ By exchanging of shares for shares
Why do mergers fail?
• Lack of human integration
• Mismanagement of cultural issues
• Lack of communication
