Guru Jambheshwar University of science and technology

Haryana School of Business.

SESSION 2019-2021.
SEMINAR TOPIC:-Mergers &
Acquisition

PRESENTED BY:-
SONIA
190101060038
M.B.A (I.B)
2 Content
∆ Introduction
∆ Merger
∆Types of merger
∆ Advantages of merger
∆ Disadvantages of merger
∆ Acquisition
∆ Types of acquisition
∆ Reasons for making acquisition
∆ Advantages of acquisition
∆ Disadvantages of acquisition
∆ Difference between merger and acquisition
∆ Conclusion
 3 Introduction

 Mergers & Acquisitions are common way

companies try to grow quickly
 Unfortunately, more than 50% of merge
fail

 Mergers & Acquisitions need to be part

of an overall strategy, otherwise they w
likely fail
4

Mergers is the combination of two

companies to form one new company.

 The combination of the two companies

involves a transfer of ownership.

 Both companies surrender their stock

and issue new stock as a new
company.
5
 4 Types of Mergers
6

Economists distinguish between

three types of mergers:
1. Horizontal
2. Vertical
3. Conglomerate
4. Market extension
 7
1.HORIZONTAL MERGERS
A Merger occurring between companies in the
same industry
 8 2.VERTICAL MERGER
When two companies produce same
goods and services for one specific
product
9 3.CONGLOMERATE MERGERS
A me r g e r b e t w e e n f i r mi n v o l v e d
i n totally unrelated business
activity
10 4. Market extension
• conglomerate mergers join together firms
that sell competing products in separate
geographic markets.
11 Advantages of merger.

 Economies of scale.
 Tax benefits.
 Financial resources.
 Entry in global markets.
 Growth and expansion.
 Helps to face competition.
 Increase in market share.
 Increases goodwill.
 Research and development (R&D).
 Miscellaneous advantages.
12 Disadvantages of
merger
 Clash of Cultures
 Diseconomies of Scale
 Consumer Perceptions
 The layoffs Dilemma
 Higher Consumer Prices
13
Acquisition

A transaction where one firm buys another firm

with the intent of more effectively using a core
competence by making the acquired firm a
subsidiary within its portfolio of businesses
14
TYPES OF ACQUISITION?

 Friendly acquisition

 Reverse acquisition

 Back flip acquisition

 Hostile acquisition
 15

Both the companies approve the acquisition

under friendly terms.
EXAMPLE:

Biotechnology

1.75 billion euro's ($2.37 billion)

16

A private company takes over a public

company.

EXAMPLE:
17 3.BACK FLIP ACQUISITION

The purchasing company becomes a

subsidiary of the purchased company.

EXAMPLE:
18

Here, the entire process is done by force.

 EXAMPLE:

$10.3 billion
 top 10 acquisitions made by
19 Indian companies worldwide
20
 Reasons for Making Acquisiti
21

Learn and develop

new capabilities
Increase Reshape firm’s
market power competitive scope

Overcome Acquisitions Increase

entry barriers diversification

Cost of new Lower risk compared

product development to developing new
Increase speed products
to market
22 Advantages of
acquisitions
 Reduced entry barriers
 Market power
 New competencies and resources
 Access to experts
  Access to capital
  Fresh ideas and perspective
23 Disadvantages of
acquisitions
 Duplication
 Conflicting objectives
 Poorly matched businesses
 Pressure on suppliers
 Brand damage
 DIFFERENCE BETWEEN MERGERS &
24 ACQUISITIONS
MERGERS
In the case of a merger, two firms
together form a new company. After
the merger, the separately owned
companies become jointly owned and
obtain a new single identity.
 Mergers take place between two
companies of more or less same size. In
these cases, the process is called
Merger of Equals.
When two firms merge, stocks of both
are surrendered and new stocks in the
name of new company are issued.
Acquisition
 However, with acquisition, one
firm takes over another and
establishes its power as the
single owner.
 The relatively less powerful,
smaller firm loses its existence,
and the firm taking over, runs
the whole business with its own
identity.
 Unlike the merger, stocks of the
acquired firm are not
surrendered, but bought by the
public prior to the acquisition,
and continue to be traded in the
stockmarket.
25 CONCLUSION

 M&A’s are considered as important change agents

and are a critical component of any business
strategy. The known fact is that with businesses
evolving, only the most innovative and nimble can
survive. That is why, it is an important strategic call
for a business to opt for any arrangements of M&A.
Once through the process, on a lighter note M&A is
like an arranged marriage, partners will take time to
understand, mingle, but will end up giving positive
results most of the times.
26 Reference
 Www.google.com
 Www.scribd.com
 Google image
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