Mergers and Acquisitions

Mergers and acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance or help a growing company in a given industry to grow rapidly without having to create another business entity. Merger is combination of two or more companies into a single company where one survives and other lose their identity or a new company is formed. The survivor acquires the assets as well as liabilities of the merged company. As a result of a merger, if one company survives and other lose their independent entity, this is called absorption. But if a new company comes into existence because of merger, it is a process of amalgamation. Merger is a tool use by the company for the purpose of expanding their operations often aiming at an increase of their long term profitability. There are 15 different types of actions that a company can take when Deciding to move forward using merger and acquisition.

Takeover is the purchase by one company of a controlling interest in the share capital of another existing company. In takeover, both the companies retain their separate legal entity. A takeover is resorted to gain control over company while companies are amalgamated to derive advantage of scale of operations, achieve rapid growth and expansion and build strong managerial and technological competence so as to ensure higher value to shareowners.