Mergers and Acquisitions

By: EconomyWatch   Date: 16 July 2010

About The Author

EconomyWatch

The core Content Team our economy, industry, investing and personal finance reference articles.

EconomyWatch, Content Team

 

  • Dot Div
  •      


Mergers

Merger is a financial tool that is used for enhancing long-term profitability by expanding their operations. Mergers occur when the merging companies have their mutual consent as different from acquisitions, which can take the form of a hostile takeover.

The business laws in US vary across states and hence the companies have limited options to protect themselves from hostile takeovers. One way a company can protect itself from hostile takeovers is by planning shareholders rights, which is alternatively known as - poison pill. If we trace back to history, it is observed that very few mergers have actually added to the share value of the acquiring company. Corporate mergers may promote monopolistic practices by reducing costs, taxes etc.

Such activities may go against public welfare. Hence mergers are regulated d supervised by the government, for instance, in US any merger required\s the prior approval of the Federal Trade Commission and the Department of Justice. In US regulation son mergers began with the Sherman Act in 1890.

Mergers may be horizontal, vertical, conglomerate or congeneric, depending or the nature of the merging companies.

Acquisitions

Acquisitions or takeovers occur between the bidding and the target company. There may be either hostile or friendly takeovers. Reverse takeover occurs when the target firm is larger than the bidding firm. In the course of acquisitions the bidder may purchase the share or the assets of the target company.

Featured Reports That You Might Like: 
Date: 
7 Feb 2012
Price: 
   

RCC Holdings (RCCH) is engaged in offering consulting, financing and overall business structure in the public and private equity sectors, through acquisitions. The company is also involved in finding undervalued small cap and microcap ...

Date: 
2 Feb 2012
Price: 
   

4net Software is engaged in identifying, investigating and acquiring undervalued businesses that enable to enhance the company's revenues and increase its shareholder value. The company acquires businesses that are established with ...

Need more featured reports? Check out Economy Watch's research Store

blog comments powered by Disqus