Financial Management Essay example
Finance & Accounting
Pages 8 (2008 words)
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FINANCIAL MANAGEMENT Name Tutor Institution In the recent past strategic alliances have dominated the world of business, this has made the trend mergers and acquisitions to experience an increasing trend. A merger refers a situation where two organizations of approximately equal size (in terms of assets and liabilities), decide to join and become one entity.


The small company is usually faced by struggling financially that is the company that is acquired usually financial problems. The large company acquires the all the stock of the smaller company and makes become component of their business, that is, the smaller company usually ends up changing its and adopts the name of the large company. In most cases acquisition are usually friendly, where two parties enter into an agreement but sometimes it involves hostile takeover. For example if the board of directors accept the tender offer. Many scholars have postulated a number of different types of mergers and acquisitions in an effort of delineate the increasing trend of strategic alliances observed in the business world. Nevertheless, there are three main types of mergers and acquisitions which are based on the structure perspective. The main three types of mergers and acquisitions include; Vertical merger refers to a situation where two firms which is in the same industry but in different levels of production combine together to form one firm. For example, a shoe manufacturing company mergers with a shoe retailing company. In this case, the combination motive is to control the supply and distribution channel (Vachon, 2011). A horizontal merger is where two companies which are in the same level of production combines. ...
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