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Mergers and Acquisitions
Mergers and acquisitions are business strategies that deal with selling, buying, and combining of companies. Mergers occur when two or more companies are joined together. When one company buys another, either through friendly or hostile takeover, it is called acquisition.
593 Questions
Five possible reasons for mergers?
-To grow faster
-To increase efficiency
-They need to acquire new product lines
-To catch up with, or even eliminate their rivals
-To lose it's corporate identity
An airline company is purchased by an electric company This purchase would be considered a merger?
If the electric company purchased the airline company than it is an acquisition by the electric company.
Role of Mergers and acquisitions as a growth strategy?
Mergers and acquisitions are tools to fulfil growth strategy. If a company is working in the market segment where there are so many growth opportunities available and in that market segment few or couple of companies are working and those companies cannot individually take benefits from that growth opportunity then couple or many companies can merge together to take benefit otherwise if the segment has two companies one is relatively large company then other but it don't own the technical speciality or that item which is required by the company to take benefit of growth opportunity but the other small firm has that speciality then the large firm can acquire the small one and by using that technical speciality of that small firm can take benefit of growth opportunity
Advantages and disadvantages of vertical merger?
Vertical integration potentially offers the following advantages:
Reduce transportation costs if common ownership results in closer geographic proximity.
Improve supply chain coordination.
Provide more opportunities to differentiate by means of increased control over inputs.
Capture upstream or downstream profit margins.
Increase entry barriers to potential competitors, for example, if the firm can gain sole access to a scarce resource.
Gain access to downstream distribution channels that otherwise would be inaccessible.
Facilitate investment in highly specialized assets in which upstream or downstream players may be reluctant to invest.
Lead to expansion of core competencies.
While some of the benefits of vertical integration can be quite attractive to the firm, the drawbacks may negate any potential gains. Vertical integration potentially has the following disadvantages:
Capacity balancing issues. For example, the firm may need to build excess upstream capacity to ensure that its downstream operations have sufficient supply under all demand conditions.
Potentially higher costs due to low efficiencies resulting from lack of supplier competition.
Decreased flexibility due to previous upstream or downstream investments. (Note however, that flexibility to coordinate vertically-related activities may increase.)
Decreased ability to increase product variety if significant in-house development is required.
Developing new core competencies may compromise existing competencies.
Increased bureaucratic costs.
A merger occurs when two or more businesses join forces to become one organization.
Pros and cons of horizontal merger?
Increases economies of scale and should lead to an improved mix of skilled people. Could broader both the product line and the distribution network.
Creates cultural conflicts and frequently interpersonal conflicts (Blue team vs. Red team). Creates extra management layers and other dis-economies of scale. Significant costs are incurred to achieve economies of scale (converting to a singel set of systems, for example). Customers of Company ABC may hate Company XYZ and leave the merged company to go to another supplier.
What is a merger in business finance?
A merger combines two companies or corporations into a single structure. Often a smaller company will become a subsidiary of a larger company, or two large companies (e.g. Chrysler and Daimler-Benz from 1998 to 2007) will combine to gain some advantage in finance or competition.
What is an example of multinational merger?
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Merger helps in the following: 1. Enforce companies and establishment as it gathers their resources and give them better chances of competition. 2. Reduce expenses such as salaries and other used materials and comsumption as it reduces many repeated jobs as administrative and indirect jobs. 3. As it reduces jobs and gathers resources, so it makes it easy to follow up employees and resources and as a result the whole business as follow up consider the vertebral column of any business.
Did Avaya merge into Sierra Merger Corp?
Avaya was purchased by Silver Lake and TPG which set up a special corporation called Sierra Merger Corp to complete the deal.
What happens to an outstanding loan when the bank closes?
When a bank closes, not just one branch of a larger bank, one (1) of three (3) things happen to outstanding loans:
The loan is purchased by a financial institution for primary use
(highly likely) When a loan is purchased by another financial organization for primary use, the intent is to service the loan. At some point (before or after the purchase), they will conduct due diligence in order to determine what loans they have (and, effectively, the quality of what they now own). After conducting due diligence, they will send you a letter indicating that they are the new owner/servicer of the loan and will provide you with an address (and other channels) through which to continue to pay the loan until it is paid off.
At this juncture, the financial company now holding your loan may continue to service the loan or sell the loan to yet another bank if the loan does not meet their
risk and/or return requirements.
The loan is purchased by a financial institution for secondary use
(not as likely) When a loan is purchased by another financial organization for secondary use, they are merely buying the loan in order to drive different value from some other part of the purchase (e.g., I like your assets and hate your loans, but I want your assets so I buy them both knowing that I will sell the loans later).
In this case, the due diligence is more for determining what loans are held and how the loans will be packaged for sale. You will still get a letter indicating a sale and providing payment information, however, you will also likely be told (in the letter) that the loan is going to be sold to a bank to be named within some period of time.
The loan is not purchased/left with closing bank
(highly unlikely) While very unlikely, the loan may not be sold and kept with the closing bank. In this situation, the bank will likely allow the loan to be written off as part of the closing process.
Original Answer:
It wilo have to be paid back to the Federal Bank.
Unfortunately you have to record it as a loss to the parent company. Or it will at least show as a loss on the financial statements.
Mainly 4 techniques to value businesses # Net Asset Valuation # Dividend Valuation Model # P/E Ratio (Earnings based) # NPV Net asset valuation simply looks at the net assets on the balance sheet of the company being valued. If the company looking to takeover the business is intending to asset strip it then book values are ignored, instead they use realisable values. Otherwise if a going concern, non-monetary items will be valued at replacement costs & monetary items at book values. For any business this valuation should be used to acertain the minimum value to be paid for the business Dividend Valuation Model is based on the equation below P0 = d0(1+g) / (Ke- g) We know that the share price is simply the present value of the future dividend payments discounted at the cost of equity. The above equation simply uses this where d is the dividend paid now, g is growth rate, Ke is cost of equity (i.e. shareholders expectations - required rate of return) The equation can be re written as P0 = d1 / (Ke- g) as a perpetuity of the future income d1 There are some issues with this model # Assumption of a constant dividend each year # Growth rate consistent & constant # Ke assumed not to change P/E Ratio - Earnings based is dependent on the P/E ratio of the business. The P/E ratio of any business signifies 3 things # Status # Prospects # Risk Price/Earning Ratio = Share Price/EPS where EPS is the earning per share EPS = Earnings/number of ordinary shares The model looks at the product of P/E ratio and earnings for the Business to determine its valuation say for example A Co P/E ratio is 15 & are forecasted earnings are £150m then, Value of A is 15*150 = 2250m This really gives us the market capitalisation of the company Issues - Main issue is whether P/E is reliable & accurate. An under performing business with excellent future prospects will be undervalued using this method Net Present Value is the best method for business valuations. This is the present value of future cash flows discounted at the WACC (hence takes into consideration both the cost of equity & debt)
American chemical corporation?
The American Chemical Corporation is a large, diversified chemical producer. It was founded in 1979 in Alabama and produces Sodium Chlorate.
Ranbaxy laboratories and Eli lilly joint venture still in place?
pl. send the answer of above question.
What were wmc resources shareholders paid by bhp when bhp bought wmc resources?
The shareholders of WMC were offered and paid $7.85/ share.
Major reasons of mergers and Acquisitions?
there are three major reasons of Mergers and acquisitions Synergy 2+2=5, total value of firms after M&A is greater than their simple arithmaticl sum Strategic fit To improve the position in the market To fill the large gap of planned and achieved growth going abroad Basic Business Reason More feasible than internal investment Disversification
How do you set up a new off shore bank?
You need to obtain a banking licensed issued by a specific country. The rules and regulations for such a license will vary based on the country.
