Professional Documents
Culture Documents
Acquisition
What is Merger & Acquisition ?
• Mergers and acquisitions (M&A) is the area of corporate finances,
management and strategy dealing with purchasing and/or joining
with other companies. In a merger, two organizations join forces to
become a new business, usually with a new name. Because the
companies involved are typically of similar size and stature, the term
"merger of equals" is sometimes used.
• In an acquisition, on the other hand, one business buys a second
and generally smaller company which may be absorbed into the
parent organization or run as a subsidiary.
Scope Acquisitions:
Horizontal Acquisition: Buying a company that sells same products,
but in different geographical markets.
While some teams are working on the establishment of the new group,
other teams must remain focused on sales and customers.: this requires
transitory management systems.
Key Trends:
I. International investment flows are changing. In the past, it
was invariably from developed country to developing country,
now a reverse trend is observed.
II. Notable among the new investors from the developing
markets are sovereign wealth funds, which are likely to have
considerable effect in future.
There is however, one inhibitor, that could potentially affect the emerging M
& A market. The increased valuation attached to companies and assets in
those markets.
Key Challenges:
i. Emerging markets are inherently fast moving and this
can be true of their fiscal regimes.
ii. Different approaches to valuation methodologies can
also arise.
iii. Variations in accounting policies can lead to
misinterpretation of reported figures.
iv. Failure to assess political risk.
v. High turnover rates among senior corporate
executives may lead to corporate memory loss.