Mergers and Acquisitions

Mergers & Acquisitions Mergers and skills argon two commonly used ways to work strategies (David, 2007). A merger go bys when one fast(a) assumes each the assets and all the liabilities of different firm of about equal size (Answers.com, 2007). An acquisition occurs when a larger throne purchases a smaller caller-out (David, 2007). Mergers and acquisitions ar usually performed in the hopes of realizing an economic gain. Here are more than reasons for mergers and acquisitions. To provide improved capacity utilization To make gnarl out use of the existing sales force To smother management staff To self-possessed out seasonal trends in sales To gain access to tonic suppliers, distributors, customers, products, and creditors To gain bare-ass technology Cost of debt reduced There are several(prenominal) advantages of an acquisition. These advantages entangle: revenue enhancements, cost reductions, lower taxationes, change in chief city requirem ents, and a lower cost of capital. Revenue whitethorn be increased through foodstuffing gains, strategic benefits, and market precedent (Answers.com, 2007). If the company has effective advertising strategies, effective economies of distribution, a larger florilegium of products or services, this causes marketing gains. Strategic benefits are the opportunities to enter upstart markets.

And lastly, acquisitions may reduce tilt (Answers.com, 2007). When competition is decreased, market power increases. Tax advantages may also prepare from mergers and acquisitions. This may occur when a target firm carries assets on its books with basis to a lower place their market v! alue (Daunt, 2003). For tax purposes, these assets could be more invaluable if they were owned by another corporation that could increase their tax basis following the acquisition. Finally, a firm with surplus property may wish to acquire another firm. By distributing the money as a dividend or exploitation it to repurchase shares, this will increase income taxes for shareholders (Daunt, 2003). With...If you want to get a full essay, direct it on our website: BestEssayCheap.com

If you want to get a full essay, visit our page: cheap essay