Acquisition
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An acquisition occurs when one company takes effective control of another company through purchase of assets or management control, without merging the companies. Acquisitions can increase market share, speed to market for new products, diversification, and avoid excessive competition. However, acquisitions also carry risks like inadequate target valuation, inability to achieve synergies, and taking on large debts to finance the acquisition. There are different forms of acquisitions including mergers, stock acquisitions, and asset acquisitions.
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financial services is a major component of financial system
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Mergers and Acquisitions - Project report Girish Khairnar
Mergers and Acquisitions - Project report Girish Khairnar
C:\over night\bid\gavin\payroll\ma 100614024619-phpapp01
C:\over night\bid\gavin\payroll\ma 100614024619-phpapp01
Gabrielle rusignuolo | Entrepreneurship and Business Management
Gabrielle rusignuolo | Entrepreneurship and Business Management
Everett wilkinson entrepreneurship and business management
Everett wilkinson entrepreneurship and business management
Introduction to principles of Mergers & Acquisitions
Introduction to principles of Mergers & Acquisitions
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Acquisition
- 1. 4/22/2017 1 Acquisition Hanisha A. Akoliya (01)
- 2. Acquisition An Acquisition may be an act of acquiring effective control by one company over assets or management of another company without any combination of companies…. 4/22/2017 2
- 3. WHY IS IMPORTANT i. Increased market share. ii. Increased speed to market iii. Lower risk comparing to develop new products. iv. Increased diversification v. Avoid excessive competition 4/22/2017 3
- 4. PROBLEM WITH ACQUISITION i. Inadequate valuation of target. ii. Inability to achieve synergy. iii. Finance by taking huge debt. 4/22/2017 4
- 6. How Companies Can Work Together Acquisition: acquired company becomes subsidiary of purchasing company. ◦ Most permanent ◦ Eliminates governance and economic fairness issues ◦ Forms of acquisitions Merger Stock acquisition Asset acquisition 4/22/2017 6
- 7. Forms of acquisitions 4/22/2017 7 Merger: two companies legally become one All assets and liabilities being merged out of existence become assets and liabilities of surviving company. Stock acquisition: acquired company becomes subsidiary of acquiring company. Asset acquisition: assets but not liabilities become assets of acquiring firm.
- 8. Taxes and Acquisitions • If it is a taxable acquisition, selling shareholders need to figure their cost basis and pay taxes on any capital gains. • If it is not a taxable event, shareholders are deemed to have exchanged their old shares for new ones of equivalent value. 4/22/2017 8
- 9. Evidence on Acquisitions • Shareholders of target companies tend to earn excess returns in a merger: – Shareholders of target companies gain more in a tender offer than in a straight merger. – Target firm managers have a tendency to oppose mergers, thus driving up the tender price. 4/22/2017 9
- 10. Reasons for Acquisitions Increased market power To increase market power firms use Overcoming entry barriers into Cost of new product development and increased speed to market Lower risk compared to developing new products Reshaping firm’s competitive scope Learning and developing new capabilities 4/22/2017 10
- 11. 4/22/2017 11