Merger name and legal structure of large

Merger means “to combine”. Merger occurs by the combination
of two equal companies to become one entity. There directors are shareholders.

 

What is
Acquisition?

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Acquisition means “to acquire”. Acquisition occurs when large company acquires small
firm. The name and legal structure of large company does not change.  In acquisition a takeover is preplanned and orderly
mannered in which both parties strongly agreed.

Types of merger:

There are few
types of merger include:

1.     
Horizontal
merger

2.     
Vertical  merger

3.     
Market
extension merger

4.     
Product
extension merger

5.     
Conglomeration

 

Horizontal merger: 
A horizontal merger two companies compete each other and share product
lines and market.

Vertical merger: A vertical merger takes place
between two companies which are producing different good or providing different
services.

Market extension merger: Two companies
choose different markets to sell same product.

Product extension merger: Two companies
choose same market to sell different products.

Conglomeration: In this merger the business of
both companies does not relate each other.

 

Why companies
merge with or acquire other companies?

·        
Companies
want to produce product at lower cost and want to increase their performance.

·        
In
merging and acquiring companies have an opportunity to grow market shares.

·        
In
merging and acquiring executives want to eliminate future competition to grow
their market.

·        
Financial
crisis and lower demand of product is main reason of merger and acquire.

 

Some reasons merger and acquisition fail:

·        
There
is poor communication between the employees of two companies having same rank.

·        
Sometimes
culture differences create problem.

·        
Internet
conflict occurs between executives and employees.

·        
New
dress code and time recording procedures irritate many employees.

·        
Changing
in human resource policies create problem and sometimes high performing
employees quit their job.

 

Advantages of merger and acquisition:

·        
Production
is increase for larger period of time and buyer power is increase.

·        
Merger
and acquisition use innovative techniques to decrease financial risk.

·        
By
merging or acquisition production of the business becomes less expensive and
more profitable.

·        
It
will be less expensive to buy a business instead of expending their own
business.

·        
The
CEO’S can easily share their skill and knowledge.

 

Purpose of acquisition
and merger:

The main purpose
of merger is to decline competition and increase operational efficiency and the
main purpose of acquisition is to increase development.

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