Merger, Acquisitions and Strategies

Merger, Acquisitions and Strategies

Introduction

The market for corporate control allows changes, improvements and efficiencies in managing thereof. This change takes place through mergers, acquisitions and changes in the board structure voted on the board. Existing evidence indicates that these changes are beneficial for companies and society in general. Mergers that are normally friendly, involve the creation of a new company through the addition of the assets and liabilities of the merging firms. The merger between two company's negotiations at an early stage between the management teams of the same. Subsequently, the melt has ratification by the shareholders. Note that the management team does not have enough power to consummate the merger (requires ratification by shareholders), but has the power to make the unsuccessful merger. (Kim, 2008)

Discussion

Control market provides external controls The internal mechanisms of corporate control, operating through the Board of Directors, Shareholders Board and management team, have to monitor because the company generates all potential wealth available for distribution, as appropriate, between shareholders, employees, customers, suppliers and society in general. Sometimes, these groups duly fulfill its mission. The existence of the market for corporate control is an additional source of management control.

The existence of that market forces the current team manager to work as efficiently as you can, otherwise, there will be another team willing to move its functions. When one functioning inverter inefficient discovers a company-that is, the possibility of restructure it to make it more efficient and increase its value can launch an operation-making control thereof, through OPA or another system. In this case, the current shareholders company in question will benefit, at least partially, of the corporate restructuring, all 6 For “Golden Parachut” means the amounts set as compensation for directors should be removed from office by the new shareholders. These numbers reach the tens of millions of pts. 7 The term “shark” is used to designate individuals whose professional activity is focused on acquiring companies, restructurings and-occasionally-sell again. (Dodd, 2007)

Normally these acquisitions are hostile. The buyer must once pay a price above the current market, in order to acquire shares enabling it to control the company. Thus, mergers and acquisitions are an additional control to the effective management team management, since if the company executives are not using the resources of the form more productive, non-business investors can take control of it to implement more effective management. (Schipper, 2011)

Theories on Mergers and Acquisitions

For a merger of two companies occurs, someone has to answer yes to the following question: Is the value of these two companies together exceed the sum of the value of each running them separately? Otherwise, there would be no interest by any of merge the two companies. Similarly, the directors of a company seeking acquiring another have to answer yes to another similar question: Would that company more value under our management it has now? If the directors and shareholders of both companies agree on the desirability of the union and-most important-in the valuation of the two companies, then ...