Compensated Awareness Post View
Disclaimer
UYMG
Acquisition Criteria
Profiles
We would consider the following profiles: 1) manufacturers, 2) importers, 3) suppliers, 4) competitors. These companies should have their headquarters in North America, (at this time) with preference in the United States. However if the US company also has distribution outside of the U.S. this could be considered desirable.
Acquisitions and mergers must be well managed if they are to capture market share and achieve profitability. Acquisition strategies must reflect sensitivity to legal, financial and community factors and to the internal strengths, needs and weaknesses of both organizations.
Mergers and acquisitions (M&A) is one of the main part of the corporate finance world. The aim is to create a bigger company by taking at least two separates companies. Deals can be worth millions of dollars, even billion sometimes (such as the merger between Microsoft and Yahoo! for approximately $44.6 billion).
We often say that the perfect equation for a merger or an acquisition is one plus one makes three. The key principle behind buying a company is to create more value for the shareholders. Two companies together are normally stronger than two companies separate. Both bring its know-how, experience, culture and so on.
There are different reasons why two companies decide to merger or to make an acquisition. It could be because they want to create a more competitive, cost-efficient company, to reduce their costs, for economies of scale reasons as well. Sometimes they know that they can complementary, meaning by merging they can take advantage of both know-how and create a better product because only one company cannot make it by its own.
It is important also, before giving some examples of merger and acquisition to make the distinction between what is a merger and an acquisition.
An acquisition it is when one company takes over another and clearly established itself as the new owner. For example Google's largest acquisition as of March 2008 is the purchase of DoubleClik which is an advertising company.
A merger it is when two companies which most of the time have the same size, agree to go forward as a single new company rather than remain separately owned and operated. For example the merger between Clear Channel and Thomas H. Lee Partners.
One size doesn't fit all. Many companies find that the best way to get ahead is to expand ownership boundaries through mergers and acquisitions. For others, separating the public ownership of a subsidiary or business segment offers more advantages. At least in theory, mergers create synergies and economies of scale, expanding operations and cutting costs. Investors can take comfort in the idea that a merger will deliver enhanced market power.
By contrast, de-merged companies often enjoy improved operating performance thanks to redesigned management incentives. Additional capital can fund growth organically or through acquisition. Meanwhile, investors benefit from the improved information flow from de-merged companies.
M&A comes in all shapes and sizes, and investors need to consider the complex issues involved in M&A. The most beneficial form of equity structure involves a complete analysis of the costs and benefits associated with the deals.
