Mergers and Acquisitions

Mergers & Acquisitions

Mergers and skills argon two commonly used ways to practise strategies (David, 2007). A merger occurs when one fast(a) assumes each the assets and all the liabilities of other firm of about equal size (Answers.com, 2007). An acquisition occurs when a larger throne purchases a smaller company (David, 2007). Mergers and acquisitions ar usually performed in the hopes of realizing an economic gain. Here are more reasons for mergers and acquisitions.
To provide improved capacity utilization
To make conk out use of the existing sales force
To reduce management staff
To self-possessed out seasonal trends in sales
To gain access to tonic suppliers, distributors, customers, products, and creditors
To gain new technology
Cost of debt reduced

There are several(prenominal) advantages of an acquisition. These advantages include: revenue enhancements, cost reductions, lower taxes, change in capital requirements, and a lower cost of capital. Revenue whitethorn be increased through foodstuffing gains, strategic benefits, and market power (Answers.com, 2007). If the company has effective advertising strategies, effective economies of distribution, a larger variety of products or services, this causes marketing gains. Strategic benefits are the opportunities to enter new markets.



And lastly, acquisitions may reduce tilt (Answers.com, 2007). When competition is decreased, market power increases.

Tax advantages may also prepare from mergers and acquisitions. This may occur when a target firm carries assets on its books with basis below their market value (Daunt, 2003). For tax purposes, these assets could be more valuable if they were owned by another corporation that could increase their tax basis following the acquisition.

Finally, a firm with surplus funds may wish to acquire another firm. By distributing the money as a dividend or exploitation it to repurchase shares, this will increase income taxes for shareholders (Daunt, 2003). With...If you want to get a full essay, order it on our website: Orderessay



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