A relationship is the coming together of two people to get one, although each of them has their own own individuality and in order to make the marriage a hit compromises should be made. This is also true for mergers and acquisitions. When two companies get together both of them have their individual operate cultures and identities in order to interact successfully they need to make some changes. Simply then can a combination or a great acquisition succeed. This is very to put it simply.
However it is not so simple, nor is it just a matter of making changes. In fact there are a lot of things that go into making a merger successful. These are the issues that one needs to take care of while going in for a merger or an acquisition The first chapter of this report seeks to explain what the various terms used to classify the coming together of two corporations means. There can be various types of mergers namely horizontal, vertical, conglomerate, concentric and consolidation mergers.
There are certain terms that are peculiar to mergers and acquisitions like golden parachutes, greenmail and so on. These terms are explained in the chapter. There are some problems that are likely to occur at every stage in the merger or acquisition process, an overview of most of the problems is given. Now we move onto the important issues that one needs to look at in order to be successful or in order to carry out a merger. It is imperative to carry out a due diligence process before the merger takes place since this helps the merging or acquiring company to assess the value of the target company. The due diligence must be thorough, only if the result is positive then one should continue the merger process. Synergy is extremely crucial to a merger or an acquisition because that is what will ensure that the merger is a success.
Synergy means that 2+2 >four, which is to admit the companies need to create a bigger value jointly than they will create when functioning on the standalone basis.. It is important that after the merger or acquisition method is full, the organization reviews its price set ups in view of the rewards that are now available to the buyers. Failure to straighten the prices together with the benefits might prove to be fatal for the organization. During the merger or obtain process the business is most vulnerable to attacks by competitors, since the firm is definitely concentrating on it is merging efforts and is unable to respond to the competitors plan. How does a single determine the value of the target firm? In practice two methods are used the Cheaper Cash Flow Technique and the Trading Multiples.
Even so the chapter points out a few more methods of valuation. After looking at all of these issues it is necessary to study the success of mergers and what they are associated with and the three main factors that one should consider in conjunction with the ones stated earlier. After having talked about mergers and purchases in general, I move onto giving an idea of so why mergers and acquisitions are growing in India and the chances that are available to get value creation. Companies may well merge around the world but when it comes to India, often they do not find the same rewards that they enter other countries. This is due to several factors like size of the businesses, legislation in India etc. The Indian environment is usually not as combination friendly as they can be; a few ways that to make India more combination friendly get. For any deal there is always a law regulating it, I use explained the take over code, which governs mergers and acquisitions in India technically.
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