Presented By Shivjeet Singh

Introduction
Corporate restructuring includes merger and acquisition, amalgamation, take-overs, spin-offs, leveraged buyouts, buyback of shares, capital reorganization, sale of business units and assets, etc. M&A are the most popular means of corporate restructuring or business combination.

Merger & Acquisition

A merger is a combination of two or more organization in which one acquires the assets and liabilities of the in exchange of share or cash, or both the organization are dissolved and assets an liabilities are combined and new stock is issued.

For the organization which acquires another, it is an acquisition. For the organization which is acquired, it is a merger. If both organization dissolve their identity to create a new organization, it is consolidation.

Forms of Merger
Horizontal merger This is a combination of two or more firms in similar type of production, distribution or area of business. Vertical merger This is a combination of two or more firms involved in different stage of production or distribution.

Conglomerate merger This is a combination of firms engaged in unrelated lines of business activities. Concentric merger This is a combination of two or more firms related to each other in terms of customer function, customer group, or technology used.

Reason for merger and acquisition

For buyer To increase the value of organizations stock. To increase the growth rate and make a good investment. To improve the stability of its earning and sales. To balance, complete or diversify its product line. To reduce competition. To acquire a needed resource quickly. To avail tax concessions and benefits. To take advantage of synergy.

For seller To increase the value of the owners stock and investment. To increase the growth rate. To acquire resource to stabilize operations. To benefit from tax legislation. To deal with top management succession problem.

Motives and benefit of merger and acquisitions

Limit competition. Utilize the under-utilized market power. Overcome the problem of slow growth and profitability in ones

own industry. Achieve diversification. Gain economies of scale and increase income with proportionately less investment. Establish a rational bridgehead without excessive start-up costs to gain access to a foreign market. Utilize under-utilized resources-human and physical and managerial skills. Displace existing management. Circumvent government regulations.

Guide lines for merger & acquisitions

Spell out the objective. Indicate how the objective would be achieved. Assess managerial quality. Check the compatibility of business styles. Anticipate and solves problems early. Treat people with dignity and concern.