AdvantagesThe main objective of business combination is to elimina.pdf
1. Advantages
The main objective of business combination is to eliminate cut-throat competition and secure the
advantages of large scale production. Competition between and among the companies will be
eliminated,which will increase profits. Monopoly in the market can be achieved by eliminating
competition. The amount of capital can be increased by combining business which may be
benefit for new marketplaces, products and plans. Operating cost can be reduced with buying in
a large amount of material (Account-Audit-Finance, (2012).Furthermore, the acquiree can be
using intangible asset from acquirer or saving tax. As example of Bank of American established
a subsidiary to which it transferred bank – originated loans and was able to save $418 million in
quarterly taxes (Baker, R. E., Christensen, T., & Cottrell, D. (2011)). For advantage of acquirer,
it has a lager of funds transferring from acquire with less risk of market during operation. As my
personal view with business combination, it has advantage for both acquirer and acquiree. The
most important is evaluating both parties’ profit before consolidation.
In a business acquisition, one company buys another company. The buying company gains the
employees of the seller, as well as the seller's rights to patents, copyrights and trademarks. A
buyout allows a company to eliminate a competing firm from the market, while gaining its
strengths. The company has to deal with the disadvantages of financing the purchase and
organizing the combination of companies (Eric Novinson, eHow Contributor (2012)).
Disadvantages
As mention from advantage of business combination, monopoly in the market may have a
negative impact with major job losses of community. It might be impact affected the profit with
un-improving service and products. When production increases, the lack of service and product
may increase too. One of the main disadvantages is that Management of the company becomes
difficult. When combining two depends firm has completely different organizational structure
will be difficult for management. From my personal experience at my workplace,our office is
recently combined with other office, communication and social relationship problems are
increasing for the workers. The major issue of consolidation is scandal and massive accounting
failures.When two firms combine, the complexity of acquisition accounting may lead to heavy
losses and cause the creditors and investors suffered. Bothcompanies merger must clarify all
financial reporting process and relating accounting rules avoid any threaten of consolidation.
Solution
Advantages
The main objective of business combination is to eliminate cut-throat competition and secure the
2. advantages of large scale production. Competition between and among the companies will be
eliminated,which will increase profits. Monopoly in the market can be achieved by eliminating
competition. The amount of capital can be increased by combining business which may be
benefit for new marketplaces, products and plans. Operating cost can be reduced with buying in
a large amount of material (Account-Audit-Finance, (2012).Furthermore, the acquiree can be
using intangible asset from acquirer or saving tax. As example of Bank of American established
a subsidiary to which it transferred bank – originated loans and was able to save $418 million in
quarterly taxes (Baker, R. E., Christensen, T., & Cottrell, D. (2011)). For advantage of acquirer,
it has a lager of funds transferring from acquire with less risk of market during operation. As my
personal view with business combination, it has advantage for both acquirer and acquiree. The
most important is evaluating both parties’ profit before consolidation.
In a business acquisition, one company buys another company. The buying company gains the
employees of the seller, as well as the seller's rights to patents, copyrights and trademarks. A
buyout allows a company to eliminate a competing firm from the market, while gaining its
strengths. The company has to deal with the disadvantages of financing the purchase and
organizing the combination of companies (Eric Novinson, eHow Contributor (2012)).
Disadvantages
As mention from advantage of business combination, monopoly in the market may have a
negative impact with major job losses of community. It might be impact affected the profit with
un-improving service and products. When production increases, the lack of service and product
may increase too. One of the main disadvantages is that Management of the company becomes
difficult. When combining two depends firm has completely different organizational structure
will be difficult for management. From my personal experience at my workplace,our office is
recently combined with other office, communication and social relationship problems are
increasing for the workers. The major issue of consolidation is scandal and massive accounting
failures.When two firms combine, the complexity of acquisition accounting may lead to heavy
losses and cause the creditors and investors suffered. Bothcompanies merger must clarify all
financial reporting process and relating accounting rules avoid any threaten of consolidation.