Mergers are considered as an amalgamation of two businesses into one entity where shareholding is partial and ownership/control is combined.
Mergers can be utilised by organisations to expand their market offering, extend into new segments, increase market share/profitability, grow sales etc.
Mergers usually take the form of one of these types namely 1. Conglomerate 2. Congeneric 3. Horizontal 4. Vertical 5. Extension.
Organisation culture is a key factor which needs considering when a merger takes place in order to ensure a successful outcome.
Acquisitions targets can be identified through diverse methods which result in company consolidation or amalgamation with an aim to achieve human resources, customer/client bases, intellectual property or acquire new product lines etc. Valuation of the acquisition target are typically done using comparable businesses in the industry through metrics such as P/E ratio, DCF etc.
Due to globalisation, acquisitions are becoming increasingly popular. However, multiculturalism resulting out of global trade is a major and crucial factor which needs serious consideration in order for the acquisitions to be successful amongst others.
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