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*Corporate Finance* As part of the financial planning process, a common practice in the corporate finance world is restructuring through the process of mergers and acquisitions (M&A). It seems that on...

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*Corporate Finance*

As part of the financial planning process, a common practice in the corporate finance world is restructuring through the process of mergers and acquisitions (M&A). It seems that on a regular basis, investment bankers arrange M&A transactions, forming one company from separate companies. What are the advantages and the disadvantages of a merger? In your response, provide an example of either - a merger that was successful, or one that was unsuccessful.

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Answered Same Day Dec 25, 2021

Solution

David answered on Dec 25 2021
137 Votes
Mergers and Acquisitions
Running head: MERGERS AND ACQUISITIONS 1
Mergers and Acquisitions
Student Name
[Institutional Affiliation(s)]
MERGERS AND ACQUISITIONS 2
Mergers and Acquisitions-
Their Advantages and Disadvantages
Mergers and acquisitions are a
angements whereby two companies start functioning as
one. Under mergers and acquisitions, the assets and liabilities of companies concerned are
consolidated ("Mergers And Acquisitions - M&A", 2017). In general, merger is a union of two
companies to form a new Company while acquisition is the a
angement whereby one company
purchases the other.
In the modern era of globalisation, mergers and acquisitions are a quick and easy way to
expand and improve one’s goodwill. When a merger is successful, the two companies unite to
create a more powerful company which is able to garner a major portion of the market share of
that industry. Mergers and acquisitions may help firms to grow in size and thus grow their
usiness manifold.
Advantages and disadvantages of Mergers and Acquisitions
While there have been many successful mergers and acquisitions in the business world, there
have been many that were unsuccessful as well. This is because mergers and acquisitions come
with their own pros and cons.
Advantages of Mergers and acquisitions
The advantages of Mergers and acquisitions are discussed.
Utilization of idle funds: Companies that are looking for profitable business
opportunities can invest their funds by merging with or purchasing another Company. This will
eap returns in terms of higher profits and higher revenues (Parikh, 2016).
MERGERS AND ACQUISITIONS 3
Diversification: A Company that wishes to diversify its activities into other areas will
enefit more by a merger with or an acquisition of a Company which is already functional in that
field. Chances of risk of failure are reduced by joining hands with a business that is...
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