Merger and Acquisition

What is corporate restructuring? Internal Method By introducing new products and expending the capacity of existing

products

External Method By acquisition of existing of business firm in the form of

merger, acquisition, amalgamation, takeovers, consolidation.

Reason behind corporate restructuring.

Importance of corporate restructuring

Reasons/Importance behind Restructuring - to survive in market

- to increase market share - to use latest technology - to increase financial strength - to overcome from insolvency - to diversify their business - to make presence worldwide

Pillars of restructuring Merger Consolidation Holding Company AcquisitionStrategy of restructuring Related Strategy Not Related Strategy

PORTER FIVE FORCE MODEL

Merger

A combination of two or more company into a single company where one survive and other loose their corporate existence.

Amalgamation one or more company may merge to form a new company. It contemplates a state of

things under which two companies are so joined as to form a third entity.

Consolidation it is mixing up of two companies to make them into a new one in which both the

existing firm loose their identity and ease to exist.

Acquisition An act of acquiring effective control by one company over assets or management of

another company, without any combination of companies.

Takeover it is nothing, just a control over management of companies by other. It in

interchangeably used by acquisition.

Industry Life Cycle

Introduction stage Exploitation stage

Maturity stage Decline stage

Value Creation in Mergers

Marketing synergy Operating synergy Investment synergy

Management synergy

Merger process Formulation of vision Growth Competition Pre-merger planning Post merger process

Steps in strategic planning in Merger

Assessment of environment change Evaluation of company capacity and limitation Assessment of expectation of stakeholders Formulation of vision, mission, goal Planning and policy Implementation Evaluation and control

Five Stage Model Corporate strategy development Organizing for acquisition Deal structuring Post acquisition integration Post acquisition audit and organizational learning

Method of Financing Mergers

Cash offer Share exchange ratio

Hybrid A combination of cash and stock of purchasing entity or debt

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