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Shareholders of acquiring firms can gain from mergers if the transaction creates synergies, enhances market share, or leads to cost savings that improve overall profitability. However, gains are not guaranteed and can depend on the premium paid for the target company and the success of integration efforts. In some cases, shareholders may experience a decline in stock value if the merger is perceived as overvalued or poorly executed. Thus, the outcome for shareholders varies significantly based on the specifics of each merger.
What else can I help you with?
What is the difference between a dividend and a capital gain?
A dividend is a payment made by a company to its shareholders from its profits, while a capital gain is the profit made from selling an investment or asset for more than its purchase price.
What is the difference between capital gain and dividend?
Capital gain is the profit made from selling an investment or asset for more than its purchase price, while a dividend is a payment made by a company to its shareholders from its profits.
What is difference between merger and cartel?
A merger refers to the combination of two or more companies into a single entity, often to enhance efficiency, market share, or competitive advantage. In contrast, a cartel is an agreement between competing firms to coordinate their actions, such as fixing prices or limiting production, to gain higher profits at the expense of competition. While mergers are typically legal and subject to regulatory review, cartels are usually illegal as they undermine market competition.
Why is shareholder wwealth maximization be a beter operating goal than profit maximization?
A firm's operating goal should be to maximize shareholder wealth as it is shareholders who are the owners of the firm. Profit maximizing however is more of a personal/management oriented type goal as it only benefits those running the company. This problem is known as the Agency issue, and it is directly related to the asymmetry of information problem that all firms suffer from. Typically, higher ranking persons in a company, usually managers, know a lot more about the firms operations than do subordinates and common stock holders; this information may be exploited so that only profits and managements' personal pay packets are maximized, and shareholders who funded the firms operations by their purchase of ordinary equity benefit none as they experience no gain through increase in share value. In order to overcome this issue, several things can be done. For example, monitoring techniques can be put in place to ensure management is acting in shareholder interest and not their own, or alternatively, management pay packets can be directly linked to the goal of maximizing shareholder wealth. If and when this goal is achieved and shareholders realize gains, management may be paid a cash bonus or an allotment of shares. Put simply, shareholder wealth maximization should be the firms operating goal simply because they are financing the firms operations with their investing in the firm; to act against their interests is unethical, but still not unheard of.
What does acquisition in stock terms mean?
In stock terms, acquisition refers to the process where one company purchases a controlling interest in another company, either by buying its shares or assets. This can occur through a variety of methods, including mergers, takeovers, or friendly buyouts. Acquisitions are often pursued to enhance market share, gain access to new technologies, or achieve synergies that can improve operational efficiency. The outcome can significantly impact the stock prices of both the acquiring and target companies.
What are inorganic growth in business?
A growth in the operations of a business that arises from mergers or takeovers, rather than an increase in the companies own business activity. Firms that choose to grow inorganically can gain access to new markets and fresh ideas that become available through successful mergers and acquisitions
What is the definition of dividend?
In finance, the word "dividend" refers to a portion of money that is paid at regular individuals by a company to its shareholders. In this way, the shareholders gain a piece of the company's profits.
What do you gain and lose by using the iPhone 4S?
By acquiring the iPhone 4s you only gain, more space, better speakers, iOS 5+ , and to me the best is Siri
What ways that a few firms can gain some control over their market?
They can gain some control over their market by secretly cooperating with one another.
What are 3 examples of corporate mergers?
The three main types of merger are horizontal mergers which increase market share, vertical mergers which exploit existing synergies and concentric mergers which expand the product offering. Types of mergers and acquisitions There are a number of different types of mergers and acquisitions. However, there are some which are the most common. Conglomerate merger Conglomerate Merger These types of mergers happen between companies that have completely unrelated sets of business activities. Usually, there are two kinds of conglomerate mergers – fixed and pure. Pure mergers happen between firms which have nothing in common while fixed mergers happen between firms which are looking to expand in a particular market or product. A live example of this can be seen in the Walt Disney and American Broadcasting Company merger. Horizontal merger Horizontal Merger This merger happens between firms that are present in the same industry. It is a consolidation where the companies operate in the same space as competitors. These acquisition types are most common in markets where there is higher competition and it would make business sense to combine two companies and become a bigger force. An example of this can be seen in the $81 billion acquisition of Mobil by the Exxon group. Vertical merger Vertical Merger These types of business takeovers happen between companies that provide different services or raw material for one finished product. You can see it as a merger between two firms that operate at different stages in one supply chain. The most common logic between these M&A is to better the synergies and cutting the cost down in the supply chain. An example of this can be seen in IKEA’s acquisition of the Romanian Baltic Forests. Market extension mergers Market extension mergers This type of mergers happen between two firms which deal in one product but in completely different markets. The main objective behind this merger type as you must have guessed is to ensure that the merging companies get better access to a bigger market and in turn a much larger client base. An example of this is the 2002 acquisition of Eagle Bancshares Inc by RBC Centura Inc. – a subsidiary of the Royal Bank of Canada. Product extension mergers This type of mergers happen between firms, operating in the same market, which deal in products that are related to each other. This merger enables the companies to merge their product and get direct access to a large client base, thus increasing the probability of higher revenue. An example of this merger type can be seen in the acquisition of Mobilink Telecom Inc by Broadcom. Congeneric mergers Congeneric mergers Also known as concentric merger is a twisted version of the horizontal merger. In these acquisition types, the two firms have separate service and product lines but they serve the same industry. This alignment between these companies creates a synergy where they become a bigger firm with combined abilities. An example of this merger type can be seen in the acquisition of E*Trade by Morgan Stanley. Reverse takeover SPAC-Merger It is one of the lesser seen mergers in the business world. Here, a private company acquires a public firm to gain an upper hand when going public. This merger type prevents them from taking the costly IPO route. This can also happen when a public company acquires a private firm. An example of reverse takeover can be seen in the acquisition of the US Airways by the America West. Acqui-hire Acqui hiring We are living in a period where big companies are making their mark with the help of their intellectual properties and talent. Acqui-hire is a merger type where a company acquires another firm purely to get control over their talent. This type is most commonly seen in the technology industry where there is usually a shortage of good developers. One example of this can be seen in the acquisition of Drop.io by Facebook. So here were the eight different types of merger and acquisition most active in the business world today. We hope you must have gotten an idea of which would be the best route for your business as you look to expand.
What is a cartel and is such merger profitable?
A cartel is a joing of all business of same sort to form a single business. Cartel mergers are profitable. For example there are three firms which behave as a cartel, if all firms collude to act as a single firm, the merger will be profitable in oligopolistic industries. It will ensure the firm will gain an economic profit and will eventually drive off the weaker firm and the price benifit will go to consumers. (Term cartel is used when similar businesses merge to form a single business, a monopoly).
Why did the Japanese feel they needed to gain resources they did not have by acquiring land in ww2 why couldn't they have imported their resources?
They were not really. They were partners with the Axis.
One way that a few firms can gain some control over their market?
They can gain some control over their markets by secretly cooperating with one another.
How does Nike's website help the company strengthen its relationships with its stakeholders?
I assume you mean shareholders. Nike's website is not exclusively there to strengthen bonds with their shareholders. It is an advertising tool, to get people to buy their products. Since shareholders are already invested, they do not market the site to the shareholders. This is not to say that a shareholder cannot access the website and gain a better sense of security by looking at the way Nike deals with its advertising, etc. Its just not specifically there for that purpose. Nike elicits different methods for shareholders.
What benefits and potential disadvantages do US firms gain from use specialized job design?
why it is so famouse
What was the fiat's primary reason for acquiring the US auto giant Chrysler?
gain a foothold in and more fully exploit the U.S market.
What is the difference between a dividend and a capital gain?
A dividend is a payment made by a company to its shareholders from its profits, while a capital gain is the profit made from selling an investment or asset for more than its purchase price.
