CA Ronak Sanghavi. A brief intro it mergers and acquisitions.

3.  A Strategic fit expresses the degree
to which an organization is
matching its resources and
capabilities with the opportunities in
the external environment.
 The matching takes place through
strategy and it is therefore vital that
the company has the actual
resources and capabilities to execute
and support the strategy.
 The concept of ‘Strategic fit’ can be
used actively to evaluate, the current
strategic situation of a company as
well as opportunities such as
Mergers & Acquisition and
divestitures of organizational
divisions.

4.  Management team
 Customer relationships
 Corporate mission
 Align the organizational structure, objectives, and
administrative arrangements

5.  Mergers and acquisitions (M&A) is a general term that
refers to the consolidation of companies or assets through
various types of financial transactions. M&A can include a
number of different transactions, such as mergers,
acquisitions, consolidations, tender offers, purchase of
assets and management acquisitions. In all cases, two
companies are involved.
 Merge means to become one whereas, acquire means to
buy

6. Acquisition
 An Acquisition occurs when a buyer acquires all or any part of
assets or business of a selling entity. This can be done by
acquiring over 51% of its Share Capital. The acquiring company
is more influential in terms of structure operations and size.
Merger
 A merger occurs when two companies combine into one entity
with a new name. It enables companies to combine their strength
and resources.

7. Types of Mergers
 Horizontal
 Vertical
 Congeneric
 Reverse
 Conglomerate
Types of Acquisitions
 Hostile
 Friendly
 Buyout

8. BASIS FOR COMPARISON MERGER ACQUISITION
Meaning
The merger means the fusion
of two or more than two
companies voluntarily to form
a new company.
When one entity purchases the
business of another entity, it is
known as Acquisition.
Formation of a new company Yes No
Nature of Decision
The mutual decision of the
companies going through
mergers.
Friendly or hostile decision of
acquiring and acquired
companies.
Minimum number of
companies involved
3 2
Purpose
To decrease competition and
increase operational efficiency.
For Instantaneous growth
Size of Business
Generally, the size of merging
companies is more or less
same.
The size of the acquiring
company will be more than
the size of acquired company.
Legal Formalities More Less

9. Why is it Important
 Increase market share
 Profit for research and
development
 Reduction of competition
 Economies of Scale
 Tax benefits such as carry
forward of losses and
depreciation
 Increased Diversification
 Increased speed to Market
Problems Faced
 Clash of corporate cultures
 Employees may resist
change
 Increased business
complexities
 Inadequate valuation of
Targets
 Inability to achieve senergy

10. Economie
s of Scale
Cost
Minimiza
tion
Expansion
of
business
Diversific
ation Risk
Increase
Market
Share
Maximiza
tion of
Profits
Goodwill
Future
Goals
Product
Improvem
ent

11.  Limited or no involvement from the
owners
 Theoretical valuation vs. the
practical proposition of future
benefits
 Lack of clarity and execution of the
integration process:
 Cultural integration issues:
 Required capacity potential vs.
current bandwidth:
 Actual cost of a difficult integration
& high cost of recovery:
 External factors and changes to the
business environment:
 Hostile Takeovers:

12. i. Axis bank Freecharge
ii. Flipkart and eBay
iii. Airtel and Telenor
iv. Tech Mahindra and CJS Solutions
v. Wipro Ltd and InfoSERVER S.A.
vi. Amazon Buys Whole Foods
vii. Intel Acquires Mobileye
viii.United Technologies Buys
Rockwell Collins
ix. Disney To Buy Some of
21 st Century Fox's Assets
x. JAB Holdings Acquires Panera

13.  The achievement of certain corporate goals and
objectives may involve the external acquisition of assets
and resources needed for growth, a step that may be
more efficient than internal expansion. Therefore, the
company should make a careful consideration before
conducting M&A, avoiding the unfortunate
consequence of capital and time. A corporate merger or
acquisition can have a profound effect on a company’s
growth prospects and long-term outlook. But while an
acquisition can transform the acquiring company
literally overnight, there is a significant degree of risk
involved as well.
 Determining a proper strategic fit for
the acquiring company is necessary as
a merger or acquisition would have a
large and long ending effect on the
major resources of the company.

14.  Thoroughly evaluate your liquidity and financial capability
 Establish your goals and measure for success
 Involve HR at the earliest possible juncture and commit to
addressing all issues and processes from a “people perspective.”
 Talk to the prospective partner’s customers or current clients, as
well as those that have left, and find out why
 Do a deep dive on their operations.
 Make sure information can be shared securely and efficiently.
 Develop a cultural assessment that helps the two groups
 Identify expectations and problems and design a realistic process
for addressing them

16.  Books
 Corporate restructuring, Valuation and Insolvency – Author Anoop
Jain
 Corporate restructuring – Author Sangeet Kedia
 Cs Professional Study Material
 Welingkar Institute’s book on Mergers and Acquisitions
 Websites
 www.entrepreneur.com
 Investopedia
 Wikipedia
 Economic Times
 Newspapers and Mobile Apps
 Economic times
 MoneyControl