There are reasons you conclude a merger on the end of a month. Anyone know why?
Here is a little DD on how a merger(aquisition) works.
When a company combines to make one new company; this is called a merger and/or acquisition. Mergers and acquisitions can also refer to the department at financial institutions that deal with acquisitions and mergers. It takes a lot of planning before deciding to merge with another company. Corporations often do it in order to restructure their business. When mergers between two big companies occur, it usually makes the news.
How Mergers and Acquisitions Affect Investors
When merges happen between two companies, investors can also be affected. This is why it is important for business owners to think long and hard before going through with one. The entire reason to merge with another company is to create shareholder value. This value should be over the total sum of both companies. When two companies combine, they are worth more.
The idea of merging is a real temptation with companies that are suffering or going through tough times. It is common for two companies to come together to become more competitive and cost-efficient. The main goal is to create a bigger market share. In most cases, one company will target another to merge with. More than often, the targeted company will be weak and unable to survive on their own. This is why weaker companies agree to merge with more stronger ones. When one company has a new owner, it is called an acquisition. The targeted company really does not exists (in the eyes of the law), while the buyer of the company is still able to trade stocks. Technically, both businesses are separately operated.
Synergy
When a merge occurs, they both will adopt something called, 'Synergy'. This is the system that allows for more developed cost efficiencies of the new business. This system usually deals with cost savings and revenue enhancement. Both of the CEOs of each company have similar goals when merging, such as; creating staff reductions, acquiring new technology, expanding market reach and industry visibility.
