NAME: BAKHTAWER IMTIAZ
CLASS: M.COM (4TH SMESTER)
SUPERVISOR: SIR BURHAN
TOPIC: MERGERS AND ACQUSITIONS
UNIVERSITY OF AGRICULTURE
The purpose of this paper find and admit the value of mergers and acquisitions this research paper represent the advantages and disadvantages reasons and impacts of mergers and acqusitions .Based on litterateurs review and case studies of both successful and unsuccessful companies this research paper clarify the concept .some mergers are successful in this word .And some mergers face the failure .when two companies merges they are face the different stages and stresses .The main purpose of the mergers in capture the market increase the profit. And competes their competitor’s. In merger and acqusitions system when two companies are merge they are change the management and take best decisions for the progress of the employees and organization. When employees are motivated the profit increase automatically.
We have been learning about the companies coming together and one company work with other company to expand their business and profit. We are daily read news in news paper this company merge with the other company .when two companies are merge the capital. Profit .customers .employees are increase .if this merger is successful the both organization earn large amount of profit and the goodwill of the both companies are increase .if this merger are fail the both organization face stress loss and failure .both organizations expand their business and export their products on international level and earn large amount of profit .In other meaning when one company face the more stress and fall In depression the other strong company purchase the weak company . The strong organization work with weak organization and expand the business end profit with the help of merger all the errors, frauds and weakness are prevent through the management of strong company…
WHAT IS MERGER?
Merger is defined as combination of two or more other companies into a single company where one survive and other loss their corporate existence the surviving company is the buyer which retain is identify and the extinguished company is the seller. When one company purchases the other company .all the shares .assets .employees .capital transfers to the new owner of the company. Merger is the fusion of two or more existing companies all the assets liabilities and the stock stand transferred to Transferee Company in consideration of payment in the form of
Equity share in transferee company
Debenture in transferee company
A mix of above modes
WHAT IS ACQUSITION?
Acqusitions is general sense is acquiring the ownership in the property in the context of business combination as acquisition is the purchase by the company of controlling interest in the share capital of other existing companies ..
Schreiber and lvancevich (1985) studied the human factors in merger and acqusitions and identified some common mergers stressors .which include uncertainty insecurity and fears concerning job loss .job changes .compensation change in power status and prestige .these stressors should be given care in remerge strategic issue lavancevich chewier and power (1987) stress process stress of the merger process and the sources of stress created and choosing guide lines and intervention to encourage more effective management of mergers stress .They suggested so me measures of effectively manifested so me measures of effectively manageress stress like prevention to reduce the actual stress including merger event .secondly reappraisal of employee which refers to changing initial cognitive appraisal of situation and at least effective stress management and professional help which support those employees that are already stressed…
ADVANTAGES OF MERGERS AND ACQUSIOTON:
Accomplished tax free for both parties:
In the merger and acqusitions both parties are free from tax liabilities .the both companies are not pay the tax to the government the both parties and organizations are free from accomplished tax …
When two parties and organizations are merge the customers of the both parties are automatically increase .because every company have customers. When two parties are merging the customers are also increase…
When two companies are merge the customers of the both parties are increase .if the customers are increase the profit of the both parties are also increase and when profit is increase the progress of the both companies are conform .
If two companies are merging the billet managers of the both companies are also merging. They are managing the every thing .problem properly. The main factor of the top company is strong management. If the management is strong every issue resolve quickly and every department of the organization work properly.
Trade on international level:
Mergers play important role in economic scale .when two units are sick they are not work properly the both unit financial position is weak. In this situation the both units are merge through the merger the financial position of the both units are increase.
Elimination of competitions:
When two companies are merge the competitions between the companies are eliminate. The company saves the adverting expense. And enjoy many benefits. In this situation the company not reduces the price of the product.
Increase in value:
The main reason of the merger is increase the value of the merged companies. With the help of new merger the value of the old merged company is increase which is very better and good for the old merged companies.
The company not growth quickly but with the help of mergers the company growth rapidly because the people are attract to the merged company number of consumers is high amount of profit is high through the mergers.
DIFFERENCE BETWEEN MERGER AND ACQUSITION:
In the merger case when the two in this case when one company at
Decide to move forward as a single new over another and established it’s self
Company instead of operating business the new owner of the business
The stock of both parties are surrendered the buyer company swallow the business
While new stock is issued afresh. Of the target company.
For example Galax welcome and smith Dr Reddy Labs acquire Batapahram
Are merge the new name of the company through an garment amounting 597
Galaxy smith Kline milling
TYPES OF MERGERS:
There are different types of mergers .Every type is different from the other type d different types of mergers show in this world some are following as:
In the vertical combinations company would like to take over the other company or seek its mergers with that company to expand espousing backward integration the resources of supply and forward integrations toward market outlets…
In the horizontal combination it is a merger of two competing firm which are the same stage of industrial firm the acquiring firm belong to the same industry as the target company the main purpose of such mergers are obtain the economics scale..
Company producing distinct products seeks amalgamation to share command distribution and research facilities to obtain economies by elimination of cost on duplication and promoting market enlargement…
IMPACTS OF MERGERS AND ACQUSITIONS:
There are different impacts on mergers and acqusitions some are following as
Impact on employees
Impact on management
Impacts on shareholders
Impact on competitions
IMPACT ON EMPLOYEES:
When two companies are merging these mergers may have greater impact on employees on both organizations this is difficult for both parties employs adjust in the new merge company
IMPACT ON MANAGEMENT:
When two companies are merging the owner o the both companies hire the qualified and trains staff when the hiring of new staff is complete the new hiring have great effect on the management department
IMPACT ON SHAREHOLDERS:
When the both companies are merge they have great effect on shareholder because shareholder is the part of the company shareholder invest their money in the company the merger have great impact on the shareholders
PROCEDURE FOR MERGERS:
Different stages are including in the procedure in mergers.
Application to the court
Direction by the court
Notice of compromise and arrangement
Approval of the seem by creditors member conditions
Court be satisfied the seem is beneficial
WHY MERGERS FAIL:
It is not secret that plenty of mergers do not work those who advocate mergers will argue that the merger will cut costs or boost revenue by more than enough to justified the price premium it can sound so simple just combine computer system merge a few department use sheer size to force down the price of supplies and the merger giant should be more profitable than its part in theory 1+1=3 sound great but in practice things can go away historically trend show that roughly two thirds of big merge disappointed on their own terms which means they will lose value on the stock market. The motivation that drive merger can be flawed and efficiency from economies of scale may prove elusive. In many cases the problem associated with trying to make merger companies work all too concrete.
COST OF MERGERS AND ACQUSITION:
Cost of merger and acqusitions are an important part in mergers acqusitions process before going of every merger and acqusitions both the company calculate the cost of merger and acqusitions to find out the volubility and profitability of the deal and project after the calculation both companies decide this deal is profitable or not.
ROLE OF MERGERS AND ACQUSITION IN TECHNOLOGY TRANSFER:
The mergers and acqusitions play an important role in the transfer of technology the both parties technology transfer from one unit to another unit the knowledge about new technology managers is increase the information’s about technology is enhance the new technology play an important role in the progress of the company there are many benefits of merger and acqusitions in the technology transfer some are following as.
The man agent is fast through new technology
Quickly delivery time
Better time do production
Increase per unit price
Capture the market quickly
Best competition with competitors
More production in little time
One of the common reason of the mergers and acqusitions is the believes that synergy exist allowing the two companies to work the efficiently to father than either would separately such synergies may result from the firm combined abilities to exploited economics of the scale eliminate duplicate functions share managerial experience and raise large amount of profit and capture the market power .the human factor is the major causes of difficulty in making the integration between two companies work successfully. Almost 60%-70% mergers and acqusitions and the reason for the failure is culture difference flawed intention and some time decision are taken without properly analysis the future of the merger
(1)D.L Schreiber and J.Lvancewich.Human”recourcess-The forgotten factor in mergers and acquisitions personnel Administrator, PP.47-61, 1985.
(2)D.M.Schweiger andY.weber”strategies for managing human resources planning vol.10 (1):pp19-35, 1987
(3) J.Bose: impacts of mergers and acqusitions, 1st Ed, J.Base(Ed), Hyderabad: ICFAL University of press.2007, pp.3_23
(4)D.schweiger and A Denise “stages of merger”
(5)J.M.Lvancevich,D,M.Schweiger and F.R.Power.(Advantages .disadvantages.reasons and type of mergers )Vol.10(1):pp19-35,1987.