Mergers and Acquisitions

Mergers and acquisitions or M&A, is the buying, selling and joining of companies for the purpose of financial stability or expansion of a company to increase their long term profitability. A merger is the voluntary combination of two companies into one larger company, and may involve cash payment or an exchange of stock to the target company. An acquisition is the takeover by purchase of a target company by another. The takeover can be friendly, the two companies negotiate the purchase, or hostile, the target company is reluctant to the deal or their board has no prior information about the bid.

Is your company considering a merger or acquisition and need the professional guidance of a CPA? Contact one our skilled CPA’s today and get assistance you need for a fruitful transaction.

Mergers and acquisitions along with corporate restructuring play an integral part in the daily global corporate market. These transactions can involve billions of dollars and can have financial implications and consequences for investors, the stock market, board members and employees alike. Typically mergers transpire in a consensual situation, that is, executives from the target company assist the purchasing company in the process to guarantee that the transaction is beneficial to both companies. A hostile takeover can take place through the purchase of a majority of outstanding shares of the target company in the open market; this can happen against the wishes of that company’s board or it can happen without the knowledge of the target company. Corporate mergers can help in cutting costs, reducing taxes, consolidating staff, and reducing market competition. M&A’s require approval by the Federal Trade Commission and the Department of Justice. This is meant to prevent unfair trade practices or attempts to monopolize any area of the market by one or more companies conspiring to control any particular sector of the market.

Acquisitions:

• Control of the target company through the purchase of a majority of shares.
• The assets of the target company are purchased and the shareholders are paid and liquidated.
• Demerger is when one company is divided into two, generating a separately listed company on a stock exchange

Mergers:

• Horizontal merger is two companies merging that produce a similar product in the same industry.
• Vertical merger is the combination of two companies that are at different stages of production of the same commodity.
• Conglomerate merger is when the two companies operate in different industries.
• Reverse merger is a way of going public without the expenditure and time required by an IPO.

Is your company considering a merger or acquisition and need the professional guidance of a CPA? Contact one our skilled CPA’s today and get assistance you need for a fruitful transaction.