What is the definition of the term mergers and acquisitions

M&A refers to the merger of two or more independent enterprises, companies merge to form a single enterprise, usually by a dominant company to absorb one or more companies, so how is the term merger and acquisition explained? Below is my compilation of the meaning of mergers and acquisitions, appreciation and selected sentences for you to read!

Meaning of Mergers and Acquisitions

Mergers and acquisitions, meaning mergers and acquisitions (abbreviated M&A), is a term used in corporate strategy, finance, and management to refer to the process of purchasing, selling, splitting, and combining different companies or similar entities without the use of creating subsidiaries or joint ventures in order to help a company grow rapidly in its field, industry, or origin. In practice, a ? Merger and acquisitions The distinction between mergers and acquisitions is getting smaller and smaller.

Merger and Acquisition (Merger and Acquisition, that is, M& A) has a very broad connotation, generally refers to mergers (Merger) and acquisitions (Acquisition). Merger? Also known as absorption merger, that is, two different things, for some reason merged into one.

It refers to the merger of two or more independent businesses, companies to form a single enterprise, usually by a dominant company to absorb one or more companies.

Acquisition? Refers to the purchase of the stock or assets of another enterprise by one enterprise with cash or marketable securities in order to obtain ownership of all or a particular asset or control of the enterprise.

Another concept related to the meaning of mergers and acquisitions is Consolidation? It refers to the merger of two or more enterprises into a new enterprise, after the completion of the merger, a number of legal persons into one legal person.

Motivation for Mergers and Acquisitions

The most basic motivation for mergers and acquisitions is the search for growth. Companies seeking to expand face the choice between internal expansion and growth through M&A. While internal expansion can be a slow and uncertain process, growth through M&A is much more rapid, although it brings its own uncertainties.

Specifically in terms of theory, the most common motivation for M&A is ? Synergy. Proponents of M&A deals often cite the achievement of certain synergies as a reason for paying a particular M&A price. Synergies from M&A include? Operating Synergy and Financial Synergy.

In the specific practice, the motivation of mergers and acquisitions, summarized in the following categories:

1. Expand the scale of production and operation, reduce costs and expenses

Through mergers and acquisitions, the enterprise scale has been enlarged, can form an effective scale effect. Scale effect can bring the full utilization of resources, the full integration of resources, reduce management, raw materials, production and other aspects of the cost, thereby reducing the total cost.

2. Increase market share, enhance the strategic position of the industry

Large-scale enterprises, along with the improvement of productivity, sales network, market share will have a relatively large increase. This establishes the enterprise's leading position in the industry.

3. Access to sufficient cheap production materials and labor, enhance the competitiveness of enterprises

Through mergers and acquisitions to achieve the expansion of the enterprise's scale, to become a major customer of raw materials, can greatly enhance the enterprise's negotiating power, so as to provide the possibility of enterprises to obtain cheap means of production. At the same time, efficient management, the full use of human resources and the visibility of the enterprise all help the enterprise to reduce labor costs. Thus improving the overall competitiveness of the enterprise.

4. Implementing brand management strategy to improve the visibility of the enterprise in order to obtain excess profits

Brand is the driving force of value, the same product, even the same quality, the value of brand-name products is much higher than ordinary products. Mergers and acquisitions can effectively increase brand awareness, improve the added value of the enterprise's products, and obtain more profits.

5. In order to realize the strategy of the company's development, through mergers and acquisitions to obtain advanced production technology, management experience, business network, professional talents and other types of resources

M&A activities are not only the acquisition of the assets of the enterprise, but also access to the acquired enterprise's human resources, management resources, technological resources, sales resources and so on. These all contribute to the fundamental improvement of the overall competitiveness of the enterprise, the realization of the company's development strategy is of great help.

6. Through acquisitions into new industries, the implementation of diversification strategy, diversification of investment risk

This situation occurs in the mixed mode of mergers and acquisitions, with the intensification of competition in the industry, the enterprise through the investment in other industries, not only can effectively expand the scope of the enterprise's operations, access to a wider range of markets and profits, but also be able to diversify due to the competition in the industry brought about by the risk.

M&A risk

Mergers and acquisitions can produce synergistic effects, can rationalize the allocation of resources, can reduce internal competition and other aspects conducive to the development of the enterprise's advantages, but there are also a lot of risks, especially the most prominent financial risk.

1. Financing risk

M&A usually requires a large amount of funds, if the financing is not appropriate, it will have a negative impact on the capital structure and financial leverage of the enterprise, increasing the financial risk of the enterprise. At the same time, only timely and sufficient to raise funds to ensure the smooth progress of the merger and acquisition.

According to the different ways of raising funds, it can be divided into two cases:

① Debt financing risk, most of the enterprises through debt financing is generally long-term borrowing, but the bank credit funds are mainly to supplement the enterprise liquidity and the lack of fixed funds, there is no credit project for enterprise mergers and acquisitions, so it is difficult to get the support of commercial banks. Another form of debt financing is the issuance of corporate bonds, although the cost of funds is lower, but the financing time is long and the amount of funding is limited.

② Equity financing risk, the issuance of common stock is a basic way to raise a large amount of funds for the enterprise, and there is no fixed interest burden, the financing risk is small. However, dividends are to be paid from net profit, the cost of capital is high, and tax benefits cannot be enjoyed.

2. The risk of asset inaccuracy in the value assessment of the target enterprise

Due to the information asymmetry between the two sides of the merger and acquisition, the enterprise is optimistic about the assets of the merged party, and after the completion of the merger and acquisition there is a possibility that there may be a serious overestimation, or even worthless, which will result in a great deal of economic loss to the enterprise. Mergers and acquisitions in the process of human subjectivity on mergers and acquisitions have a great impact, mergers and acquisitions can not be implemented according to the law of market value. M&A itself is a commodity exchange relationship, so the need to establish intermediary organizations to serve the M&A, reduce the information cost of the merger and acquisition of both parties and to provide guidance and supervision of mergers and acquisitions.

3. Anti-acquisition risk

If the M&A evolves into a hostile takeover, the acquired party will set up obstacles at all costs, thus increasing the acquisition cost of the company, and may even lead to the failure of the acquisition.

4. Operational risk and resettlement of employees of the acquired company

After the completion of the merger and acquisition, the company may not produce synergies, and it is difficult to realize the resources of both sides of the merger and acquisition to **** enjoy the complementary effect, and there may even be diseconomies of scale, and the whole company may be dragged down instead. And the acquirer will often be required to resettle employees of the acquired company or pay the relevant costs, if the company is not handled properly, often resulting in a heavy burden, increasing its management costs and operating costs.

Risk strategy for mergers and acquisitions

Smooth mergers and acquisitions can bring a lot of development, but if the merger and acquisition is hindered, it will also bring a lot of losses to the enterprise. Enterprises should take appropriate measures to reduce the risk of mergers and acquisitions.

1. Understand the value and situation of the target company

Enterprises should reasonably determine the value of the target company to reduce the valuation risk. Information asymmetry is the root cause of the risk of target company value assessment, therefore, enterprises should carry out an exhaustive review and evaluation of the target company before M&A.

Enterprises can hire an investment bank to conduct comprehensive planning based on the company's development plan, and conduct a comprehensive analysis of the target company's industrial environment, financial condition and operating ability, so as to make a reasonable expectation of the target company's future earning power. To be careful of the loopholes in the financial statements of the acquired party, pay more attention to the off-balance sheet content, whether there are pending litigation, large guarantees and other expected liabilities, whether the main facilities, key equipment is mortgaged, etc., to prevent the risk of asset misrepresentation.

2. Timing, speed

Once a company has identified an M&A target, it should time it to move in, move out, and strategize. It is not advisable to have a long battle line, time-consuming and laborious, inflated merger and acquisition costs, or worse, to the target company drilled a gap, the loss of the shipment. So be decisive and quick.

3. Unified strategic direction, proper placement of employees

Enterprises should guard against operational risks and the risk of employee resettlement, from the production, technology, resources, markets and other aspects of the complete integration, the overall layout. In addition, the cultural concepts should be unified, the two sides before the merger and acquisition of development goals, job requirements, management methods are different, after the merger and acquisition of a unified direction. Finally, to properly install the staff, the employees of the merged and acquired enterprises are treated equally, given the same welfare benefits and political treatment, will stimulate the enthusiasm of the employees of the merged and acquired company, the benefits of the merger and acquisition can be guaranteed.

Types of M&A

According to the different functions of M&A or according to the characteristics of industrial organization involved in M&A, M&A can be divided into three basic types

1. Horizontal M&A

The basic feature of horizontal M&A is the horizontal integration of enterprises in the international context. In recent years, due to the global wave of industry restructuring, combined with the actual development needs of China's industries, coupled with China's national policies and laws on horizontal reorganization of certain support, the industry's rapid development of horizontal mergers and acquisitions.

2. Vertical mergers and acquisitions

Vertical mergers and acquisitions are mergers and acquisitions that take place between upstream and downstream of the same industry. Vertical mergers and acquisitions are not direct competition between enterprises, but the relationship between suppliers and demanders. Therefore, the basic feature of vertical M&A is the vertical integration of enterprises within the overall scope of the market.

3. Mixed Mergers and Acquisitions

Mixed M&A is a merger

acquisition that takes place between firms in different industries. Theoretically, the basic purpose of hybrid M&A is to diversify risks and seek economies of scope. In the face of fierce competition, China's enterprises in various industries have different degrees of diversification, mixed mergers and acquisitions is an important method of diversification, for enterprises to enter other industries to provide a powerful, convenient, low-risk way.

The above three kinds of M&A activities in China's development situation is different. At present, China's enterprises basically get rid of the idea of blind diversification, more horizontal mergers and acquisitions took place, data show that the proportion of horizontal mergers and acquisitions in China's merger and acquisition activities has always been about 50%.

Horizontal M&A is undoubtedly the most direct impact on the development of the industry. Mixed mergers and acquisitions to a certain extent has also been developed, mainly in the strength of the stronger enterprises, a considerable part of the mixed mergers and acquisitions situation more industries have better benefits, but the development prospects are uncertain. Vertical mergers and acquisitions in China is relatively immature, basically in the iron and steel, oil and other energy and basic industrial sectors. The cost of raw materials in these industries has a great impact on the efficiency of the industry, therefore, vertical mergers and acquisitions have become an effective way to strengthen the business of enterprises.

Sentences on Mergers and Acquisitions

1. In Canada, this merger is subject to review under the provisions of the country's Competition Act and Investment Act.

2. The CSRC decides whether or not to recuse the relevant M&A committee members based on the written application submitted by the M&A applicant and other relevant units and individuals.

3. The common forms of asset reorganization of listed companies are: mergers and acquisitions, trusteeship, and shell purchase.

4. One of the drivers for Chinese companies to enter into such overseas M&A deals is the desire to make the acquired business work in the Chinese domestic market. China's growth potential is more attractive than that of developed economies.

5. The Shanghai branch of the Bank of Communications is currently in the process of approaching companies for M&A loans, including steelmakers and shipbuilders. These include steel companies and shipbuilders.?

6. Strengthen the information disclosure regulation of foreign M&A to prevent stock market? black-box operation? and large fluctuations in the stock market.

7. Although the current environment in Western Europe and the United States is not conducive to a number of large M&A deals, there are some bright spots globally.

8. Mergers and acquisitions are of great significance to our micro- and macro-economy.

9. Behind BAIC's eagerness to pursue overseas M&A is the company's desire not to be out of the domestic auto industry.

10. By acquiring Alcatel's G core technology, the group has acquired core intellectual property rights.

11. European stock markets closed lower, with the Stoxx falling for the second consecutive day, as concerns about the spread of the European debt crisis offset the impact of corporate M&A activity.

12. The impact of enterprise value on M&A is of general significance, and in particular has a direct impact on M&A between listed companies.

13. The development of cross-border M&A and economic globalization has not been smooth, but the ? spiral upward? will not end.

14. Will M&A be the next cyclical area to reach a climax?

15. Mr. Wang mails letters and buys stamps and airmail sheets at a post office in the United States.

16. At the same time, more and more Chinese companies are looking to foreign currency financing for overseas M&A.

17. The board of directors of the company is discussing the acquisition.

18. Dongsheng and Fosun have chosen two different M&A strategies: specialization and diversification.

19. If Musa survives the next few weeks and buys a wig that can be faked to his advantage in the region, competent to work for the faltering dictator.

20. Before joining Apple Computer, Cook served as vice president of purchasing for Compaq, a computer maker that was then the market leader in personal computers but has since been acquired.

21. The M&A and Reorganization Committee (M&RC) votes on M&A and Reorganization applications by ballot and issues opinions on them.

22. she added: ? We are proposing this M&A program to grow the Company's performance and we are keen to continue to build on Cadbury's iconic brands and strong British heritage through increased investment and enhanced innovation.

23. We have heard that it is in preparation for the upcoming merger and acquisition that the company is significantly streamlining its personnel.

24. Like the ambitious mergers and acquisitions of that time, Google will probably regret its over-optimism.

25. In response to the shortcomings of previous M&A performance studies, this paper increases the examination period and sets strict sample selection criteria.

26. Hewlett-Packard's upward revision of its offer for PAR on Friday is the latest development in the escalating merger battle. And sources familiar with the situation told Reuters on Friday that HP has plenty of ammunition in this bidding war.

27. According to Allen Wong of the law firm Simmons, "China is not the only country blocking mergers and acquisitions. Other places have the same procedures... Every government has the same considerations." .

Guess what you like:

1. terms about development

2. terms about costs

3. terms about tendering for projects

4. terms about services

5. terms about explanations

6. terms about corporate strategy

7. terms about Reforms

8. Adjustments

8.