Either sale or acquisition of a company, including merger procedure, is an important event in life and in career of a company and its leaders. There are all kinds of elements surrounding it: economic, juridical, tax, emotional to play attention to achieve success for our clients.
We put our efforts, either in M&A advising and consulting and sale and set in market of companies. We operate in assessment, tax advising, corporate juridical and contract advising, and have a wide expertise in national and international transactions, but for us it a must to be client close from the beginning to completion, but over all we follow him, advising and walking along with him, in circumstances that occur once transaction is over: tax events, contractual consequences, labour problems. We are close to our people.
- Mergers and acquisitions (M&A) are complex, involving many parties.
- Mergers and acquisitions involve many issues, including:
- Corporate governance.
- Form of payment.
- Legal issues.
- Contractual issues.
- Regulatory approval.
M&A analysis requires the application of valuation tools to evaluate the M&A decision
DEFINITIONS
- The target company (or target) is the company being acquired.
- The acquiring company (or acquirer) is the company acquiring the target.
- A hostile takeover is when the target company board of directors objects to a takeover offer.
- A friendly transaction is when the target company board of directors endorses the merger or acquisition offer.
| TYPE | CHARACTERISTIC | EXAMPLE |
| Horizontal merger | Companies are in the same line of business, often competitors. |
Walt Disney Company buys Lucasfilm (October 2012). |
| Vertical merger | Companies are in the same line of production (e.g., supplier–customer). | Google acquired Motorola Mobility Holdings (June 2012). |
| Conglomerate merger | Companies are in unrelated lines of business. | Berkshire Hathaway acquires Lubrizol (2011). |
| Creating Value |
Synergy | |
| Growth | ||
| Increasing market power | ||
| Acquiring unique capabilities or resources | ||
| Unlocking hidden value | ||
| Cross-Border Mergers | Exploiting market imperfections | |
| Overcoming adverse government policy | ||
| Technology transfer | ||
| Product differentiation | ||
| Following clients | ||
| Dubious Motives | Diversification | |
| Bootstrapping earnings | ||
| Managers’ personal incentives | ||
| Tax considerations | ||
The motives for a merger are influenced, in part, by the industry’s stage in its life cycle.
Factors include:
- Need for capital.
- Need for resources.
- Degree of competition and the number of competitors.
- Growth opportunities (organic vs. external).
- Opportunities for synergy.
| Form of the Transaction |
Stock purchase | |
| Asset purchase | ||
| Method of Payment | Cash | |
| Securities | ||
| Combination of cash and securities | ||
| Attitude of Management | Hostile | |
| Friendly | ||
- In a stock purchase, the acquirer provides cash, stock, or combination of cash and stock in exchange for the stock of the target firm.
- A stock purchase needs shareholder approval.
- Target shareholders are taxed on any gain.
- Acquirer assumes target’s liabilities.
- In an asset purchase, the acquirer buys the assets of the target firm, paying the target firm directly.
- An asset purchase may not need shareholder approval.
- Acquirer likely avoids assumption of liabilities.
- Mergers create value for the target company shareholders in the short run.
- Acquirers tend to overpay in merger bids.
- The transfer of wealth is from acquirer to target company shareholders.
- Roll: Overpayment results from “hubris”
- Acquirers tend to underperform in the long run.
- They are unable to fully capture any synergies or other benefit from the merger.