By Lee Frederiksen, Ph. January 8, Share Mergers and acquisitions have become a popular business strategy for companies looking to expand into new markets or territories, gain a competitive edge, or acquire new technologies and skill sets.
Cash[ edit ] Payment by cash. Such transactions are usually termed acquisitions rather than mergers because the shareholders of the target company are removed from the picture and the target comes under the indirect control of the bidder's shareholders.
Stock[ edit ] Payment in the form of the acquiring company's stock, issued to the shareholders of the acquired company at a given ratio proportional to the valuation of the latter. They receive stock in the company that is purchasing the smaller subsidiary. Financing options[ edit ] There are some elements to think about when choosing the form of payment.
When submitting an offer, the acquiring firm should consider other potential bidders and think strategically. The form of payment might be decisive for the seller. With pure cash deals, there is no doubt on the real value of the bid without considering an eventual earnout. The contingency of the share payment is indeed removed.
Thus, a cash offer preempts competitors better than securities. Taxes are a second element to consider and should be evaluated with the counsel of competent tax and accounting advisers. If the issuance of shares is necessary, shareholders of the acquiring company might prevent such capital increase at the general meeting of shareholders.
The risk is removed with a cash transaction. Then, the balance sheet of the buyer will be modified and the decision maker should take into account the effects on the reported financial results.
On the other hand, in a pure stock for stock transaction financed from the issuance of new sharesthe company might show lower profitability ratios e. However, economic dilution must prevail towards accounting dilution when making the choice.
The form of payment and financing options are tightly linked. If the buyer pays cash, there are three main financing options: There are no major transaction costs. It consumes financial slack, may decrease debt rating and increase cost of debt.
Transaction costs include fees for preparation of a proxy statement, an extraordinary shareholder meeting and registration. If the buyer pays with stock, the financing possibilities are: Issue of stock same effects and transaction costs as described above.
Transaction costs include brokerage fees if shares are repurchased in the market otherwise there are no major costs.
In general, stock will create financial flexibility.Merger Acquisition And International Strategies Marketing Essay For the corporation that has acquired another company, merged with another company, or been acquired by another company, evaluate the strategy that led to the merger or acquisition to determine whether or not this merger or acquisition was a wise choice.
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The research, Merger, Acquisition, and International Strategies, includes merger scrutiny. The research includes marketing strategy analysis.
The U.S. Airways and American Airlines Merger contributes to synergy benefits. To understand the concepts of Merger, Acquisition and International strategies, we shall look at the different merging and acquiring firms in terms of their performances when they were sole . Merger Acquisition For the corporation that has acquired another company, merged with another company, or been acquired by another company, evaluate the strategy that led to the merger or acquisition to determine whether or not this merger or acquisition was a wise choice.
Merger, Acquisition, and International Strategies Name: Institution: Course: Tutor: Date Introduction Merger as the name suggests, involves merging or putting together two or more different business entities from a sole management, administration or operations to one major entity.
Proven merger and acquisition marketing plans, strategies, and transition services for startups through Fortune 50 companies during mergers and acquisitions.