Mergers and acquisitions a major part of the corporate law world all over the world, yet very much misunderstood and still a looked over part. All the major companies businesses and such at some point in their lifetime go through a merger or acquisition to expand their business or get helped by another. The term merger is pretty self explanatory it is a merging of two or more business enterprises to act as one entity, and acquisition is a take over of an enterprise by another for their resources or influence. Mergers and acquisitions is that part of the law where two enterprises enter a contract and set the terms, these terms have to be exact and precise right down to the point for all the expectations of both the entities. These can later be altered or exploited so to avoid any such scenario lawyers draw up a bulletproof paperwork stating the terms of both the enterprises.
Mergers and acquisitions (M&A) is a general term that describes the consolidation of companies or assets through various types of financial transactions, including mergers, acquisitions, consolidations, tender offers, purchase of assets, and management acquisitions. The terms “mergers” and “acquisitions” are often used interchangeably, but they differ in meaning.
In an acquisition, one company purchases another outright.
A merger happens when two separate entities cease to exist and become one separate entity under the banner of a new corporate name. For example when Diamler Benz and Chrysler ceased to exist and DiamlerChrysler was created. A purchase deal will also be called a merger if both the CEOs agree that its in the best interest of the companies to join forces. Unfriendly take overs of companies or hostile take overs however are said to be acquisitions, as they do not wish to be purchased or how the offer was brought to the board of directors. These kind of deals happen every day in our life without us even noticing it, with small start up companies or Major conglomerates such as Hero Honda and the purchase deal ( merger ) of WhatsApp and Instagram by Facebook.
Two of the key drivers of capitalism are competition and growth. When a company faces competition, it must both cut costs and innovate at the same time. One solution is to acquire competitors so that they are no longer a threat. Companies also complete M&A to grow by acquiring new product lines, intellectual property, human capital, and customer bases. Companies may also look for synergies. By combining business activities, overall performance efficiency tends to increase, and across-the-board costs tend to drop as each company leverages off of the other company’s strengths
Mergers and acquisitions are a tool for growth as well as surviving in the capitalist world. This is why it is a major study of the law and many law school now teach mergers and acquisitions as a sole subject. It is a contract of sorts and also a purchase deal, thus giving it a special status in law and a whole new study. There are several other kinds of it and more divided into other forms of mergers. This is an ever-evolving field of law and there’s always new case studies and examples put forward to learn from and it is different every time, making it the most interesting field of law.
Comments
Post a Comment