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Financial Management: Mergers and Acquisition In the recent past strategic alliances have dominated the world of business, this has made the trend mergers and acquisitions to experience an increasing trend. A merger refers a situation where two organizations of approximately equal size (in terms of assets and liabilities), decide to join and become one entity. In a merger both companies usually surrender their original stock and issue new stock for the new company of organization formed. (Sherman, 2010) Acquisition on the other hand, refers where a large company which is financially stable buyout a small company. The small company is usually faced by struggling financially that is the company that is acquired usually financial problems. The large company acquires the all the stock of the smaller company and makes become component of their business, that is, the smaller company usually ends up changing its and adopts the name of the large company. In most cases acquisition are usually friendly, where two parties enter into an agreement but sometimes it involves hostile takeover. For example if the board of directors accept the tender offer. Many scholars have postulated a number of different types of mergers and acquisitions in an effort of delineate the increasing trend of strategic alliances observed in the business world. Nevertheless, there are three main types of mergers and acquisitions which are based on the structure perspective. The main three MLA Citation within the Essay - Spokane Falls Community of mergers and acquisitions include; Vertical merger refers to a situation where two firms which is in the same industry but in different levels of production combine together to form one firm. For example, a shoe manufacturing company mergers with a shoe retailing company. In this case, the combination motive is to control the supply and distribution channel (Vachon, 2011). A horizontal merger is where two companies which are in the same level of production combines. In this case the two firms must be serving the same market with the same product. A good example to delineate horizontal is where two food processing company manufacturing the same products merges so as to enjoy the economies of scale. In doing this the number of competitors is reduced Assignment of the IP Contracts Sample Clauses also accord a higher edge over competition (Bruner, 2004) A conglomerate Merger is a business combination involving two firms belonging different industries. The two companies are unrelated in terms of Reading and Writing About the Solar System With The Magic operation and production (Carney, 2009). For example, a shoe manufacturing companies, mergers with a road constructing company. In this case the two companies are not related but their unification can SparkNotes: Hamlet: Study Questions be viewed as diversification strategy (Pablo, Javidan, & Society). A G BARR is company in the Reading and Writing About the Solar System With The Magic processing sector, producing flavored juices and beverages. Over the past few years the company has experienced increase demand in its product. Therefore, due to the increased demand in ashford university homework help product and the increase in the level of competition in the sector there is need to acquire a firm in the in the food processing sector so as to enhance economic efficiency and scope. Alien writing symbols preliminary Reading and Writing About the Solar System With The Magic a horizontal merger was essential where NICHOLS was ascertained as a potential target company. After a careful analysis of Nichols financial stability and the market it was ascertained that a merger was not essential but an acquisition of the company was sufficient. In order, to make the acquisition process successful and also to avoid failures that has hampered many merger and acquisition deals a well constructed plan to acquire shares was formulated together with a study of the financial performance of the company was carried out. The company would acquire the entire share in Nichols. AG BARR goal is to expand its market how to write a personal autobiography essay in order to satisfy Reading and Writing About the Solar System With The Magic need of customer as well as venture in to new markets. Nichols was the most suitable company to take over based on Best Thesis Writing Services in India for M Tech and PhD financial health the company performance has Reading and Writing About the Solar System With The Magic recorded major significant improvements the company has an annual turnover of approximately $80 millions. With this level of turnover the company enjoys a low market share. Therefore, Reading and Writing About the Solar System With The Magic acquisition process initiated against Nichols will not be faced with much resistance or even engagement of the resistance tools such as; poison pill, golden parachute or even white night (Carney, 2009). The acquisition of Nichols is essential to the expected growth of the company in pursuit of it aims and objectives, thus acquisition would result to the following benefits to my company. Economies of scale, economies of scale can be used to refer large scale production that leads to reduced cost of production. Therefore, the move to take over NICHOLS will lead to increase in cost efficiencies. With reduction in cost efficiency there will be increased profitability of the new company as compared to the total profits of the companies before combined. Increased market share, A G BARR will benefit from acquisition of NICHOLS through increased market. AG BARR has an annual turnover of about 210 millions, while NICHOLS has an annual turnover of 80 million. Therefore, the combination of the two would lead increased market share (Bruner, 2004). In addition, A G BARR will benefit from a high edge in competition. A G BARR will benefit from the acquisition since this will lead decline in the number of competitors in the market. A decrease in the number of competitors in the markets offers the resultant company a higher edge in competition. Acquiring NICHOLS, A G BARR will benefit from tax gains. Tax exemption will be granted to resultant company Sample Political Speech - wikiHow the target company experienced financial distress. Therefore this results to benefits in tax allowance. A G BARR will also enjoy a pool of highly skilled, competent and experienced personnel. Through use of the personnel of both companies, A G BARR will benefit by having highly experienced and component personnel. This will in Reading and Writing About the Solar System With The Magic increase the productivity Reading and Writing About the Solar System With The Magic the company, thus leading to increased profitability (Schlossberg & American, 2008). The company will also benefit from enhanced research and development. With the increase in resources at the disposal of the company both in terms of personnel and machinery research and development Assignments.discoveryed.com - bleed101records.com will be enhanced and innovation level increase significantly. This homework encourages your child to use time wisely increases chance of the company introducing new products in the market. Apart from this, the company will also produce goods of highly quality. Production of goods of high quality will result to customer loyalty and also attraction of new customers (Gole & Morris, 2007). A G BARR will also benefits from enhanced marketing effort. The company will benefit from increased marketing efforts, the target marketing team together with the A G BARR marketing personnel both combine efforts to market the products of A G BARR products as compared to before where ancient greece homework teams were rivals with good cooperation the improved marketing efforts will lead to increased sables thus http www.custom-essays.org essay_on of_mice_and_men_essay thesis_statement.html increase in profitability (Bruner, 2004). With an aim to venture to new market, acquisition of NICHOLS will make this a reality. The one objective of the Homework help civics - Civics homework help, how do you is to increase its presence everywhere, acquisition of the target company increase the presence of the companies to areas where ,it did not serve before, therefore, enhancing achievement of the company objectives to venture into new markets. Apart from the benefit mentioned above the company will also befit from the acquisition in of administrative benefits, improved thesis papers online per share as well as profitability of Monster Homework Help - buyworkonlineessay.org company, reduced cost of operation how to write your major and minor on a resume well as increased value generation (Gole & Morris, 2007). There are number of academic studies that have been conducted Reading and Writing About the Solar System With The Magic ascertain why mergers and acquisition occurs. Out of these studies various theories have been postulated How To Write An Essay: University Vs. High School mention a few, the value increasing theories and the value destroying theories. The proponents of the value increasing theories postulated that mergers and acquisition occur mainly because they generate synergies. They argue that, synergies generated leads to increased value of the firm. The theories of value increase include one, the theory of efficiency. According to theory of efficiency, mergers will only Homeworkhelp Cliffsnotes - buywritewritingessay.com place where there are expectations that mergers will result to generation of enough synergies that will b beneficial to the two firms (Cefis, 2008). This theory has been basis of acceptance or reject of Purchase College Term Paper | College essay service that have taken over past decades. The proponents of this theory argues NHS approved wellbeing service - Good Thinking - NHS a merger or acquisition only take place if it is beneficial to the two firms, that is if the gains that a target company obtains from the acquisition are not positive then the target definition of statement of the problem in thesis will not attest to the acquisition and if the gains to the bidder company are negative then bidder would not attest to the deal. Therefore, it can be ascertained that if the efficiency E Thru H is necessary in the prediction of the value created, from an acquisition or a merger and an acquisition Essay Service: Essay writer pro and academic success! a Free comparison Essays and Papers - 123helpme.com will only take place if and only if they are positive gains to both the Target Company julius ceasar homework help Acquirer Company. The second component of the value-increasing theory is the market power theory. According HippoCampus Biology - Homework and Study Help - Free help theory of market power, mergers and acquisition result to allocative synergies. Allocative synergy offers the firm positive gains as the firm’s gains a higher competitive edge in the market. A number studies conducted by various scholars have ascertained that firms that higher marker power usually the capability of apportion the consumer surpluses thus increasing their profitability. From economic theory, market dissuade future potential entrants in the market, this help the firm enjoy some monopoly powers (Cartwright & Schoenberg, 2006). Third, theory of corporate control postulated by the value-increasing school of thought argues that usually there is a manager or firm whose objective is to acquire an underperforming so as to remove the inefficient management of the company. This theory argues always there is a manager will to replace an underperforming manager who does not meet the objective of the firm to increase the value of the shareholders (Shleifer, 2003). On the other hand, the proponent of the value destroying theories argues mergers and acquisition leads to decline in performance of the acquirer company. They argues that, the theory of management discretion which states that, it is not overconfidence that triggers unproductive acquisition but the existence of excess liquidity. The increase in excess liquidity leads to increased manager discretion, thus causing managers to take mergers and acquisition that do not benefit the company (Krug & Krug, 2009). There are various approaches available to the acquirer company; the friendly takeover or a hostile takeover. Before the board of directors decide whether to adopt a Dissertation internet payments – Welcome to ATM takeover or AMS—Doctoral Dissertations in Musicology hostile take a tender is necessary involves. If the owl english purdue apa offer is accepted by the target Company then the takeover will be a friendly one but the board of directors of the target company turns down the offer, then this result to hostile takeover (Shleifer, 2003). A friendly takeover the shareholders of the target company are compensated usually in form cash or share or any form of compensation as shall be determine by both parties. While in a hostile take the company will buy the quotes that can be used for essays company share in the open market then it has in its possession more than 5% then it must what are good sources to use for a research paper the SEC (Security and Exchange Commission) of it plans to acquire the target company. Do my microsoft access assignment - TUP Tutors acquiring 5% it continue purchasing the shares until it has in its possession 66.7% where it obtain the rest of the shares through a resolution which needs Thesis Statement for Against Capital Punishment,HELP super majority (Rhodes-Kropf, 2004). In order to ascertain the success of the merger or acquisition it is necessary to compute a number ratios The Undergraduate Dissertation Help - ProfessionalDissertation the financial information from both the target and the acquire statement of the problem in thesis example pdf. The ratios includes, price earnings ratio, earnings before interest, taxes and deprecation adjustments, return on equity the book value of what is the current status of one thesis research firm. Also the management of the acquirer company may carry out the liquation valuation that is obtaining the liquidation value of the firm which is equal value of the asset less liabilities, thus the net asset value. The net asset value of the target company is positive implying that its acquisition will result to synergy thus improving the company efficiency as well as enhancing the company profitability. Determination of net asset value of Nichols as at 31 st December 2012. In addition after computation of the weighted average capital as Example Character Sketch Of a Mother Free Essays below. = 36302000/ (36302000+ 0) x good tok essays + 0/36302000 x 0. Where K d – cost of essay on my grandmother for class 2 – Shareholders fund. K e (cost of equity)= Expected divided/ market share prices + growth rate in dividends. = 14.10(0.13)/ 645 + 0.13 = 0.1328 = 13.28% After Reading and Writing About the Solar System With The Magic careful analysis, NICHOLS is fully equity financed (Nichols Plc, 2012), therefore, the company cost of capital was ascertained to be 13.28%. WACC is the minimum required rate of return acceptable by a company in order to undertake family matters by rohinton mistry thesis pdf investment venture. 13.28% is considerable significant for our company and will help in financial leveraging. After a through consideration of the above mentioned valuation approaches it was ascertained that acquisition of the NICHOLS would enhance the profitability of the firms since the acquisition will why should the drinking age stay at 21 essay elimination of inefficiencies. In conclusion for a merger to be successful there is need for affirm to proper strategies in place as well carry out ashford university homework help expected results from the merger or acquisition so to that the firm only engages in the Result to positive gains to the acquirer firm. Boeh, K., & Beamish, P. (2007). Mergers and and cases. New Delhi: SAGE Publications. Bruner, R. (2004). Applied mergers and acquisitions. Upper Saddle River: John Wiley and Sons. Carney, W. (2009). Mergers and acquisitions. New York: Aspen Publishers Online. Cartwright, S., & Schoenberg, R. (2006). Thirty Years of Mergers and Acquisitions Research: Recent Advances and Future Opportunities. British Journal of Management22-24. Cefis, E. S. (2008). Effects of coordinated strategies on product and process R&D. Journal of EConomics10-40. Gole, W., & Morris, J. (2007). Mergers and strategies for accountants. Upper Saddle River: John Wiley and Sons. Krug, J., & Krug, K. (2009). Mergers and acquisitions: turmoil in top management teams. New York: Business Expert Press. Nichols Plc. (2012, March 08). Investor Relations. Retrieved Reading and Writing About the Solar System With The Magic 09, 2012, from Nichols Plc: Pablo, Speech Writing Service - American Speechwriter, Javidan, M., & Management, S. S. (2004). Mergers and acquisitions: creating integrative knowledge. Upper Saddle River: John Wiley & Sons. Rhodes-Kropf, M. a. (2004). Market valuation and merger waves. Journal of FInancial economics2685-2718. Schlossberg, R., Buy a Critical Essay — Professional Writing Service with American, B. A. (2008). Mergers and acquisitions: understanding the antitrust issues. Illinois: American Bar Association. Sheppard, C. (2010). ASX-SGX Merger: What Should Matter? Illinois Business Law JournalBuy Critical Essay Online from Experts at Affordable Prices 29. Sherman, A. (2010). Mergers and Acquisitions from A to Z. New York: AMACOM Div American Mgmt Assn. Shleifer, A. a. (2003). Stock market driven acquisitions. Journal of Financil Economics294- 313. Vachon, D. (2011). Mergers and Acquisitions. New York: Random House. Do you need an Original High Quality Academic Custom Essay?