1. Briefly discuss the key reasons for mergers & acquisitions including basic economic reasons and elaborate the reasons & the expectations of acquiring The Navigator by the main group,
Reasons for Mergers and Acquisitions
Why do mergers take place? It is believed that mergers and acquisitions are strategic decisions leading to the maximization of a company's growth by enhancing its production and marketing operations. They have become popular in the recent times because of the enhanced competition, breaking of trade barriers, free flow of capital across countries and globalization of business is a number of economies are being deregulated and integrated with other economies. A number of reasons are attributed for the occurrence of
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Synergy refers to benefits other than those related to economies of scale. Operating economies are one form of synergy benefits. But apart from operating economies, synergy may also arise from enhanced managerial capabilities, creativity, innovativeness, R&D and market coverage capacity due to the complementarily of resources and skills and a widened horizon of opportunities.
Synergy value can take three forms
Revenues
By combining the two companies, we will realize higher revenues then if the two companies operate separately.
Expenses
By combining the two companies, we will realize lower expenses then if the two companies operate separately.
Cost of Capital
By combining the two companies, we will experience a lower overall cost of capital.
For the most part, the biggest source of synergy value is lower expenses. Many mergers are driven by the need to cut costs. Cost savings often come from the elimination of redundant services, such as Human Resources, Accounting, Information Technology,
etc. However, the best mergers seem to have strategic reasons for the business combination. These strategic reasons include
• Accelerated Growth
A company may expand and/or diversify its markets internally or externally. If the company cannot grow internally due to lack of physical and managerial resources, it can grow externally by combining its operations with other companies through mergers and acquisitions. Mergers and acquisitions may help to
Mergers and acquisitions have become a growing trend for companies to inorganically grow a business within its particular industry. There are many goals that companies may be looking to achieve by doing this, but the main reason is to guarantee long-term and profitable growth for their business. Companies have to keep up with a rapidly increasing global market and increased competition. With the struggle for competitive advantage becoming stronger and stronger, it is almost essential to achieve these mergers. Through research I will attempt to dissect the best practices for achieving merger success.
Becoming a larger more efficient company with a strengthening competitive position opens up the opportunity for more mergers and acquisitions of competitors, suppliers and/or customers.
A week after Wisconsin in Illinois, Goldwater squared off against Margaret Chase Smith. Rockefeller dared not challenge Goldwater in the conservative state, neither did anyone else of much consequence for that matter with Lodge and Nixon still undeclared. Goldwater needed to prove to Republicans that he could win, and Illinois, with 26 electoral votes, was a coveted prize. Feminist groups put Smith’s name on the ballot, hoping that she could elicit the kind of challenge that made her famous when she spoke out against Senator McCarthy. For the Arizonian, her campaign would bring a level of prestige to the race without risking a defeat, and, more importantly, a write-in victory like the one in New Hampshire would not be possible as the
Once again, “A takeover is when one business buys another business. This tends to be more hostile as the buying business is the main one to benefit.” There are some advantages you can gain from this. Firstly, likewise to merging, there can be international growth. “Businesses can make their services or products available globally by acquiring businesses in various locations internationally. For instance, Belgium brewing company, InBev took over Budweiser for $52 billion in 2008 in order to expand its presence in the U.S. market and create one of the largest consumer beverage companies in the world, according to The Times. Due to the acquisition, profits of the company rose by 11 percent in 2011, according to France 24.” (http://smallbusiness.chron.com/)
Question 1 Several factors have been proposed as providing a rationale for mergers. Among the more prominent ones are (1) tax considerations, (2) diversification, (3)
In this chapter, we first provide coverage of expansion through corporate takeovers and an overview of the consolidation process. Then we present the acquisition method of accounting for business combinations followed by limited coverage of the purchase method and pooling of interests provided in a separate sections.
In the article “An Imam in America”, author Andrea Elliott (2006) argues that flexibility and creativity should be given higher priority in Islam or other religions when it comes to the assimilation to the modernity of America. Her article is a fine illustration and narrative of the life an imam has to endure in America. Elliot (2006) mentions that in Egypt, where the imam was raised and educated, "imams are appointed by the government and monitored for signs of radicalism or political dissent."(Elliott, 2006). Consequently, there job is spiritual as well as political. However, his life in America proves to be the exact opposite of the training and environment he gained in Egypt. The liberality and modernity of America is a stark contrast to
According to the researchers the increased value results from an opportunity to utilize a specialized resources which arises solely as a result of the merger (Jensens & Ruback, 1983; Bradle, Desai and Kim , 1983). For creating operational and financial synergies managers believe that two enterprises will be worth more if merged than if operates as two separate entities. Thus, the two companies, A and B:
AN example, in 2008, Hewlett Packet purchased Electronic Data Systems to enhance the services aspect of the partnering technology offerings (Yurko, 1996). Marketing networks now give companies much wider customer access including overnight services. One such merger is the Takeda Pharmaceutical Inc. Although distribution chains work great to increase the bottom line, these mergers are not well received by federal agencies like the Federal Trade Commission. The concern being monopolization which is when one company controls too much of a given industry. Another driver of mergers is a desire for a leadership change. Sometimes the owner of the high technology firms simply wants to sale out and has problems finding a successor within to take the helm. Hence, a merger holds an
In addition, like any other merger between two firms, companies benefit from significant cost synergy during the implementation of an acquisition and/or merger with other company. For example, when two companies combine their strengths to complement each other, they restructure their operations and as a result several offices and sites are closed down which leads to the laying off of employees, consolidating services and software applications. All these changes, result in synergy savings for the new company.
A lot of times, company merge to become more competitive . The consolidation of these
The Circle and Fahrenheit 451 shows too much technology limits knowledge on society. Any society that looses knowledge becomes dangerous. Farenheit 451 goes as far as burning books and making people like Beatty, Millie, and most of their society believe that there is no reason to read (Bradbury73) the greatest source of knowledge is a book. As technology advances the system changes, and it became easier to make people believe that something as old as books wasn't necessary. Books challenge the mind, and in Fahrenheit 451 it took that challenge away from you limiting the mind strictly to technology. The issue with technology is it can be altered within seconds at any moment unlike a book that can’t be changed once printed unless a whole new
One major objective of mergers is to be able to reduce or fully eliminate the weaknesses that may exit in
When companies combine/merge the whole objective is to gain new opportunities, gain market share, grow the business, to become more innovative and to improve product offerings, utilizing/sharing the existing resources and data. From the case
Bargain Power and Economy of Scale are the most important factors about a merger in the goods industry.