Long-Term Management Decisions

Page 1 of 2

Long-Term Management Decisions

By | June 2009
Page 1 of 2
What is an acquisition? Acquisition is when one organization purchases a piece or every bit of another organization’s proprietorship or shares for the purpose of having control over that particular organization. By and large, acquisitions are acquired by one of two ways, which are ready money or stock. In some cases acquisitions are acquired by both money and by stock. Moreover, companies many times execute acquisitions for the purpose to expand or further its own company (Gitman, 2009). There are some factors in which an organization executes acquisitions as a strategic business move. For example a reason would be to expand its clientele. The site of the obtained company could possibly in another part of the world; the organization that had performed the acquisition has the advantage of obtaining the instant market existence. Another factor for which a company executes an acquisition is to obtain its vendors and this is a way for the company to enhance its revenue gain. As a result the company that executed the acquisition, it can handle the source accessibility and complete expense. Another example for which an organization executes an acquisition is to obtain another corporation’s strong points. Where it has weaknesses, the obtained corporation can enhance those areas with its strong points (Gitman, 2009). Keep in mind that there are some frequent mistakes that happen when organizations execute acquisitions and they are as follows: •The need of persuasive tactical justification. This often occurs when a corporation is tied up in an intense mergers and acquisitions market. •Insufficient due industry and what this means is that some important area of the company did not get released or comprehended during the due diligence stage. •Unrealistic cost or extreme cost of the corporation to be acquired •Failure to incorporate expeditiously. Dependent on the size of the target corporation, the incorporation procedure of a company should...