Merger. Research Proposal

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Research proposal
Fedorenko Danil
Merger.
Case of "ExxonMobil". Outcomes
Table of content:

Literature review

Mergers and acquisitions represent the ultimate in change for a business. No other event is more difficult, challenging, or chaotic as a merger. It is imperative that everyone involved in the process has a clear understanding of how the process works. In the contemporary world mergers and acquisitions are a normal way of life within the business world. Peter Davies wrights in his article “The Changing World Petroleum Industry – Bigger Fish in a Larger Pond, 2000” that in today's global, competitive environment, mergers are sometimes the only means for long-term survival. In cases, such as Exxon & Mobil, mergers are a strategic component for generating long-term growth. Additionally, many entrepreneurs no longer build companies for the long-term; they build companies for the short-term, hoping to sell the company for huge profits. In the book "The Art of Merger and Acquisition Integration", Alexandra Reed Lajoux puts it best: "Virtually every major company in the United States today has experienced a major acquisition at some point in history. And at any given time, thousands of these companies are adjusting to post-merger reality. For example, so far in the decade of the 1990's (through June 1999), 96,020 companies have come under new ownership worldwide in deals worth a total of $ 3.9 trillion - and that's just counting acquisitions valued at $ 5 million and over. Add to this the many smaller companies and nonprofit and governmental entities that experience mergers every year, and the M & A universe becomes large indeed". When we use the term "merger", we are referring to the merging of two companies where one new company will continue to exist (Rick MacMilman cited Shay, Donald, et al. “Speed Makes the Difference: A Survey of Mergers and Acquisitions,”). The term "acquisition" refers to the acquisition of assets by one company from another company. In an acquisition, both companies may continue to exist. The acquiring company will remain in business and the acquired company (which we will sometimes call the Target Company) will be integrated into the acquiring company and thus, the acquired company ceases to exist after the merger (Rick MacMilman cited Shay, Donald, 2000).   Simply put as it describes Peter Hallmark in his review of the issue for PWC 2004, a merger is a combination of two or more distinct entities into one; the desired effect being not just the accumulation of assets and liabilities of the distinct entities, but to achieve several other benefits such as, economies of scale, acquisition of cutting edge technologies, obtaining access into sectors / markets with established players etc. Generally, in a merger, the merging entities would cease to be in existence and would merge into a single surviving entity. Very often, the two expressions "merger" and "amalgamation" are used synonymously. But there is, in fact, a difference. Merger generally refers to a circumstance in which the assets and liabilities of a company (merging company) are vested in another company (the merged company). The merging entity loses its identity and its shareholders become shareholders of the merged company. On the other hand, an amalgamation is an arrangement, whereby the assets and liabilities of two or more companies (amalgamating companies) become vested in another company (the amalgamated company). The amalgamating companies all lose their identity and emerge as the amalgamated company; though in certain transaction structures the amalgamated company may or may not be one of the original companies. The shareholders of the amalgamating companies become shareholders of the amalgamated company (John Rogers cited Pautler, Paul A. “Evidence on Mergers and Acquisitions” in his article “What is the corporate merger?”)....
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