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    Presentation On: Merger and Acquisition'

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    Vandana Insan
    This document provides an overview of mergers and acquisitions. It defines mergers as a combination of two companies on equal footing, while acquisitions occur when one company takes over another. There are two types of mergers - mergers through absorption, where one company loses its identity, and mergers through consolidation, where both companies are dissolved to form a new company. Motives for M&A include accelerating growth, enhancing profitability, gaining market power, and achieving economies of scale. The document outlines the steps in analyzing M&As, including planning, search/screening, financial evaluation, negotiation, and post-merger integration.

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    Presentation On: Merger and Acquisition'

    Uploaded by

    Vandana Insan
    128 views35 pages
    This document provides an overview of mergers and acquisitions. It defines mergers as a combination of two companies on equal footing, while acquisitions occur when one company takes over another. There are two types of mergers - mergers through absorption, where one company loses its identity, and mergers through consolidation, where both companies are dissolved to form a new company. Motives for M&A include accelerating growth, enhancing profitability, gaining market power, and achieving economies of scale. The document outlines the steps in analyzing M&As, including planning, search/screening, financial evaluation, negotiation, and post-merger integration.

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    Merger & Acquisition

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    This document provides an overview of mergers and acquisitions. It defines mergers as a combination of two companies on equal footing, while acquisitions occur when one company takes over another. There are two types of mergers - mergers through absorption, where one company loses its identity, and mergers through consolidation, where both companies are dissolved to form a new company. Motives for M&A include accelerating growth, enhancing profitability, gaining market power, and achieving economies of scale. The document outlines the steps in analyzing M&As, including planning, search/screening, financial evaluation, negotiation, and post-merger integration.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    128 views35 pages

    Presentation On: Merger and Acquisition'

    Uploaded by

    Vandana Insan
    This document provides an overview of mergers and acquisitions. It defines mergers as a combination of two companies on equal footing, while acquisitions occur when one company takes over another. There are two types of mergers - mergers through absorption, where one company loses its identity, and mergers through consolidation, where both companies are dissolved to form a new company. Motives for M&A include accelerating growth, enhancing profitability, gaining market power, and achieving economies of scale. The document outlines the steps in analyzing M&As, including planning, search/screening, financial evaluation, negotiation, and post-merger integration.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 35

    Presentation

    on Merger and acquisition

    Presented by Vandana 843

    business

    Mergers
    Amalgamation

    combination

    Acquisitions Takeovers

    Merger

    A merger is when two companies, more or less on equal footing, decide to join forces. It is considered to be an equal transaction, with both parties accepting risk and sharing in the potential rewards

    in India merger is called Amalgamation

    Merger takes place in two way:-

    Merger Through Absorption

    Merger
    MERGER THROUGH CONSOLIDATION

    Merger Through Absorption

    Merger

    An Absorption is Combination of two or more companies into an existing company All companies except one lose their identity

    Examples

    Western Union Bank Merged With IDBI

    New Bank Of India Merged With PNB

    Bank Of New York Merged With Mellon Financial

    Merger Through Consolidation

    Merger

    A consolidation is a combination of two or more Companies into a new Company

    All companies are dissolved to form a new Company

    Merger Through Consolidation

    Merger

    Hindustan Computers Ltd

    Hindustan Instruments Ltd

    Indian Software Co .Ltd

    Indian Reprographic Ltd

    HCL LTD

    FORMS OF MERGER

    Horizontal Merger

    Vertical Merger

    Conglomerate Merger

    Cross border international M&A

    1. Horizontal

    A merger in which two firms in the same industry combine. Often in an attempt to achieve economies of scale and/or scope.

    For example, combining of two book publishers or two luggage manufacturing companies to gain dominant market share 2. Vertical

    A merger in which one firm acquires a supplier or another firm that is closer to its existing customers. Often in an attempt to control supply or distribution channels.

    For example, joining of a TV manufacturing(assembling) company and a TV marketing company or joining of a spinning company and a weaving company.

    3. Conglomerate

    A merger in which two firms in unrelated businesses combine. Purpose is often to diversify the company by combining uncorrelated assets and income streams

    For example, merging of different businesses like manufacturing of cement products, fertilizer products, electronic products, insurance investment and advertising agencies. L&T and Voltas Ltd are examples of such mergers. 4. Cross-border (International) M&As
    A merger or acquisition involving a Indian and a foreign firm a either the acquiring or target company.

    Acquisition

    When one company takes over another and clearly established itself as the new owner, the purchase is called an acquisition. From a legal point of view, the target company ceases to exist, the buyer "swallows" the business and the buyer's stock continues to be traded

    Acquisition & Takeover

    When Acquisition is unfriendly or hostile It may be called Takeover

    M&A Objectives

    Faster Growth Improving Profitability Managerial Effectiveness Gaining Market Power Leadership Cost Reduction

    Are there any alternatives to Mergers or acquisitions?

    Merger
    Alternatives

    Joint Venture Strategic Alliance Eliminating Inefficient Operations Productivity Improvement Hiring Capable Managers

    MOTIVES & BENEFITS


    OF

    MERGERS

    Limit Competition Market Power Diversification Growth Economy of Scale Access to Foreign Market Resources Displace existing Management Aggressiveness Diversifying Risk Profitability

    Accelerated Growth

    MOTIVES & BENEFITS


    OF

    MERGERS

    Expanding Existing Markets Entering New Markets Expand Internally Expand Externally Developing Operating Facilities Price Paid for Merger

    Enhanced Profitability

    MOTIVES & BENEFITS


    OF

    MERGERS

    Economies of Scale Operating Economies Synergy

    Reduction in Tax Liability

    MOTIVES & BENEFITS


    OF

    MERGERS

    Carry forward Losses Tax on Share

    Financial Benefits

    Eliminating Financial Constraints

    MOTIVES & BENEFITS


    OF

    Deploying Surplus Cash Enhancing Debt Capacity Lowering Financial Costs

    MERGERS

    Increased Market Power

    Market Share

    MOTIVES & BENEFITS


    OF

    Bargaining Power

    MERGERS

    Technological Advancement
    Pricing

    Limiting Competition

    Planning
    Steps in Analysis Of Mergers & Acquisitions

    Search & Screening Financial Evaluation Mode of Merger Negotiation


    Post Merger

    Steps in Analysis Of Mergers & Acquisitions

    Planning

    Objective of Acquisitions Strengths & Weaknesses Business Units-dropped or Added

    Industry Data
    Target Firm
    Market Growth Competition Ease Of Entry Capital & Labour Degree of Regulation
    Quality Of Mgt Market Share Size Capital Structure Profitability Production &Marketing Capabilities etc

    Search & Screening


    Steps in Analysis Of Mergers & Acquisitions

    Where to look for candidates Is it too large or small Engaged in related or unrelated Activity Export oriented or Local Amenable or not amenable to merger

    Financial Evaluation
    Steps in Analysis Of Mergers & Acquisitions

    Determining
    Earnings Cash flows Areas Of Risk Maximum Price Payable How to Finance Merger

    Current Market Value

    Premium Value

    Mode of Merger
    Steps in Analysis Of Mergers & Acquisitions

    Regulations
    Time frame Resources Degree of control Assume hidden liabilities

    Negotiation
    Steps in Analysis Of Mergers & Acquisitions

    Your intentions should be to pay one dollar more than the value to the next highest bidder and an Amount that is less than the value to you

    Post Merger
    Steps in Analysis Of Mergers & Acquisitions Check Hostility Anticipate Problems Solve Problems Treat people With Dignity

    Art of taking over Company Without overtaking It

    Value Created by Merger

    Economic Advantage (EA) if VPQ > (VP + VQ)


    Where

    VPQ =Combined PV of merged firms

    VP= Worth of Firm P VQ=Worth of firm Q

    Value Created by Merger

    Economic Advantage
    EA = VPQ - (VP + VQ)

    Few Mergers, Acquisitions, Take over

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