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Mergers & Acquisitions - Essay Example

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Mergers & Acquisitions

“Mergers and acquisitions represent the ultimate in change for a business No other event is more difficult, challenging, or chaotic as a merger and acquisition. It is imperative that everyone involved in the process has a clear understanding of how the process works”. Since the past decade, the globalisation of the businesses across the globe has initiated a search for the competitive advantage, worldwide. With the increased competition to fetch the customer satisfaction in a cost effective way, the companies have responded to the pressure of attaining scale in a quickly consolidating global economy. In addition to some other trends, such as privatisation, deregulation and corporate restructuring, globalisation has encouraged an unparalleled surge in the cross-border merger and the acquisition activities.Cross-border consolidation activities are a significant component of global business operations.This report will look into the mergers and acquisitions of companies in the light of current issues. For better understanding, the analysis would be done in the light of relevant theories and applications with the mention of specific examples in the arena of merger and acquisitions. Through ‘merger’, two companies would join together to create a new company.Acquisition refers to one company taking over the assets of another company. Merger and acquisition can be of three types: Horizontal, Vertical and Conglomerate. In horizontal mergers and acquisitions, two firms, involved, deal across similar products and services. This type of mergers and acquisitions is frequently used as the mean for an organisation to enhance the market share through getting into merger with a competing firm or by acquiring the same. For an instance, consolidation among Mobil and Exxon would allow these companies to attain a large chunk of share in the oil and gas market. Vertical mergers and acquisitions happen when two organisations are merged through the value-chain, such as any manufacturer firm merging with one supplier or a manufacturer acquiring its supplier firm. Vertical consolidation processes are mostly used as significant mean to gain the competitive advantage in the respective marketplace by leveraging on the value chain. For an instance, Merck, a leading pharmaceuticals manufacturer, merged with the leading pharmaceuticals distributor, Medco. This was done to fetch the benefits in products distribution. Consolidations are conglomerate when two firms from entirely dissimilar industries merge. For an instance, a gas pipeline organisation merging with high technology organisation or acquiring the same can be seemed as a conglomerate merger. Conglomerates are mostly used as significant mean to smooth out broad fluctuations in the revenue amount and offer more constancy in the growth in long-term. Typically, organisations in the mature industries which have poor growth prospects would seek to broaden their businesses horizons through mergers and acquisitions. For an instance, General Electric has diversified its business through merger and acquisition activities. GE has got into new segments like television broadcasting and financial services through a number of mergers and acquisitions of the financial services and entertainment organisations. Mergers and Acquisitions in United Kingdom United Kingdom has been the host of a number of mergers and acquisitions. The value of UK domestic acquisitions in the third quarter, 2010, amounted to ?2.6 billion which is slightly up ...Show more

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“Mergers and acquisitions represent the ultimate in change for a business.No other event is more difficult or chaotic as a merger and acquisition.It is imperative that everyone involved in the process has a clear understanding of how the process works”…
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