Mergers and acquisitions

mergermergedM&Aacquisitionacquisitionsacquiredmergersmerger and acquisitionmergemergers & acquisitions
Mergers and acquisitions (M&A) are transactions in which the ownership of companies, other business organizations, or their operating units are transferred or consolidated with other entities.wikipedia
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Consolidation (business)

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From a commercial and economic point of view, both types of transactions generally result in the consolidation of assets and liabilities under one entity, and the distinction between a "merger" and an "acquisition" is less clear.
In business, consolidation or amalgamation is the merger and acquisition of many smaller companies into a few much larger ones.

Takeover

hostile takeoveracquisitionAcquired
An acquisition/takeover is the purchase of one business or company by another company or other business entity.
In business, a takeover is the purchase of one company (the target) by another (the acquirer, or bidder). In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to the acquisition of a private company.

Due diligence

due caredue diligence auditdue-diligence
The letter of intent generally does not bind the parties to commit to a transaction, but may bind the parties to confidentiality and exclusivity obligations so that the transaction can be considered through a due diligence process involving lawyers, accountants, tax advisors, and other professionals, as well as business people from both sides.
A common example of due diligence in various industries is the process through which a potential acquirer evaluates a target company or its assets for an acquisition.

Material adverse change

Conditions, which must be satisfied before there is an obligation to complete the transaction. Conditions typically include matters such as regulatory approvals and the lack of any material adverse change in the target's business.
A material adverse change (also called a MAC) - also formulated as an Material adverse event or Material adverse effect (either, a MAE) - contingency is a legal provision often found in mergers and acquisitions contracts and venture financing agreements that enables the acquirer (or funder) to refuse to complete the acquisition or merger or financing with the party being acquired (often termed, the "target") if the target suffers such a change.

Demerger

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The terms "demerger", "spin-off" and "spin-out" are sometimes used to indicate a situation where one company splits into two, generating a second company which may or may not become separately listed on a stock exchange.
It is the converse of a merger or acquisition.

Valuation (finance)

valuationinvestment analysisvaluations
asset valuation,
Valuations are needed for many reasons such as investment analysis, capital budgeting, merger and acquisition transactions, financial reporting, taxable events to determine the proper tax liability, and in litigation.

Stock exchange

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Acquisitions are divided into "private" and "public" acquisitions, depending on whether the acquiree or merging company (also termed a target) is or is not listed on a public stock market.
A takeover bid or a merger agreement through the stock market is one of the simplest and most common ways for a company to grow by acquisition or fusion.

Vertical integration

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Vertical integration: Vertical integration occurs when an upstream and downstream firm merge (or one acquires the other). There are several reasons for this to occur. One reason is to internalise an externality problem. A common example of such an externality is double marginalization. Double marginalization occurs when both the upstream and downstream firms have monopoly power and each firm reduces output from the competitive level to the monopoly level, creating two deadweight losses. After a merger, the vertically integrated firm can collect one deadweight loss by setting the downstream firm's output to the competitive level. This increases profits and consumer surplus. A merger that creates a vertically integrated firm can be profitable.
Vertical integration is often closely associated to vertical expansion which, in economics, is the growth of a business enterprise through the acquisition of companies that produce the intermediate goods needed by the business or help market and distribute its product.

Boutique investment bank

boutique marketBoutique Investment Banks
Highly focused and specialized M&A advice investment banks are called boutique investment banks.
Of those involved in corporate finance, capital raising, mergers and acquisitions and restructuring and reorganizations are their primary activities.

Square Enix

Square Enix Co., Ltd.SquareSquare Product Development Division 1
A horizontal merger is usually between two companies in the same business sector. An example of horizontal merger would be if a video game publisher purchases another video game publisher, for instance, Square Enix acquiring Eidos Interactive. This means that synergy can be obtained through many forms such as; increased market share, cost savings and exploring new market opportunities.
The original Square Enix Co., Ltd. was formed as the result of a merger between Enix Corporation and Square Co., Ltd. in April 2003, with Enix as the surviving company.

Sega Sammy Holdings

SammySammy StudiosSammy Corporation
Conglomerate M&A is the third form of M&A process which deals the merger between two irrelevant companies. The relevant example of conglomerate M&A would be if a video game publisher purchases an animation studio, for instance, when Sega Sammy Holdings subsidized TMS Entertainment. The objective is often diversification of goods and services and capital investment.
Sega Sammy Holdings Inc. or Sega Sammy Corporation is a Japanese & Korean consolidated multinational conglomerate holding company formed from the merger of Sega and Sammy in 2004.

Letter of intent

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The documentation of an M&A transaction often begins with a letter of intent.
To declare officially that the parties are currently negotiating, as in a merger or joint venture proposal

Strategic management

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As an aspect of strategic management, M&A can allow enterprises to grow or downsize, and change the nature of their business or competitive position.
The relative advantages of horizontal integration, vertical integration, diversification, franchises, mergers and acquisitions, joint ventures and organic growth were discussed.

Managerial hubris

Manager's hubris
Manager's hubris: manager's overconfidence about expected synergies from M&A which results in overpayment for the target company.
Managerial hubris is one reason a manager may choose to invest in a merger that on average generates no profits.

Verizon Communications

VerizonBell AtlanticGTE
4) Discard both legacy names and adopt a totally new one. The classic example is the merger of Bell Atlantic with GTE, which became Verizon Communications. Not every merger with a new name is successful. By consolidating into YRC Worldwide, the company lost the considerable value of both Yellow Freight and Roadway Corp.
Bell Atlantic changed its name to Verizon Communications in June 2000 when the Federal Communications Commission approved a US$64.7 billion acquisition of telephone company GTE, nearly two years after the deal was proposed in July 1998.

Purchasing

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An acquisition/takeover is the purchase of one business or company by another company or other business entity.
Mergers and acquisitions

Horizontal integration

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The most viable solution to this problem was for firms to merge, through horizontal integration, with other top firms in the market in order to control a large market share and thus successfully set a higher price.
A company may do this via internal expansion, acquisition or merger.

Competition regulator

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Competition regulator
Competition regulators may also regulate certain aspects of mergers and acquisitions and business alliances and regulate or prohibit cartels and monopolies.

Acqui-hiring

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Graham was probably the first to identify the trend in which large companies such as Google, Yahoo! or Microsoft were choosing to acquire startups instead of hiring new recruits, a process known as acqui-hiring.
Acqui-hiring or Acq-hiring (a portmanteau of "acquisition" and "hiring") or talent acquisition, is the process of acquiring a company to recruit its employees, without necessarily showing an interest in its current products and services—or their continued operation.

Fairness opinion

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Fairness opinion
A fairness opinion is a professional evaluation by an investment bank or other third party as to whether the terms of a merger, acquisition, buyback, spin-off, or privatization are fair.

Venture capital

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Venture capital
Venture capitalists provide this financing in the interest of generating a return through an eventual "exit" event, such as the company selling shares to the public for the first time in an initial public offering (IPO) or doing a merger and acquisition (also known as a "trade sale") of the company.

Lehman Brothers

LehmanLehman Brothers Holdings Inc.Lehman Brothers Kuhn Loeb
In a study conducted in 2000 by Lehman Brothers, it was found that, on average, large M&A deals cause the domestic currency of the target corporation to appreciate by 1% relative to the acquirer's local currency.
Stephen A. Schwarzman, chairman of the firm's M&A committee, recalled in a February 2003 interview with Private Equity International that "Lehman Brothers had an extremely competitive internal environment, which ultimately became dysfunctional."

Post-merger integration

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Merger integration
Post-merger integration or PMI is a complex process of combining and rearranging businesses to materialize potential efficiencies and synergies that usually motivate mergers and acquisitions.

Merger simulation

Merger simulation
Merger simulation is a commonly used technique when analyzing potential welfare costs and benefits of mergers between firms.

General Electric

GEGeneral Electric CompanyGeneral Electric Co.
Companies such as DuPont, US Steel, and General Electric that merged during the Great Merger Movement were able to keep their dominance in their respective sectors through 1929, and in some cases today, due to growing technological advances of their products, patents, and brand recognition by their customers.
The list of GE businesses varies over time as the result of acquisitions, divestitures and reorganizations.