Mergers and Acquisitions

Topics: Foreign exchange market, Currency, Mergers and acquisitions Pages: 4 (1191 words) Published: October 15, 2006
Mergers and acquisitions immediately impact organizations with changes in ownership, in ideology, and eventually, in practice. There are multiple reasons, motives, economic forces and institutional factors that can, taken together or in isolation, influence corporate decisions to engage in mergers or acquisitions. The financial risks of merging with or acquiring an organization in another country and how those risks can be mitigated are important issues for corporations to conduct research on. This paper will examine the sensible and dubious reasons for mergers and acquisitions and the benefits and costs of the cash and stock transactions. Mergers and Acquisitions

According to Florida Incorporation, a merger is the statutory combination of two or more corporations in which one of the corporations survives and the other corporations cease to exist. An acquisition is obtaining control of another corporation by purchasing all or a majority of its outstanding shares, or by purchasing its assets (Florida Incorporation, 2006).According to Gilles McDougall, the reasons for mergers and acquisitions are numerous and include: ·To diversify or expand markets;

·To acquire particular production technologies;
·To take advantage of work forces with particular skills; or ·To benefit from "good opportunities" to take over a corporation. Over the last few years, the pressures emanating from international competition, financial innovation, economic growth and expansion, heightened political and economic integration, and technological change have all contributed to the increased pace of mergers and acquisitions. Cash and Stock Transactions

There are several options available for companies looking to acquire a foreign company by means of a merger or an acquisition. One of the safest ways is for a company to acquire a business is to use cash in advance. Cash advance may be safer for the buyer, but getting the company at the other end to agree may be...

References: Brown, Eric. D.B.A. (2006). Week Five Lecture. Retrieved on July 6th, 2006 from the Course Materials Web Folder.
Florida Incorporations. (2006). Florida Incorporation Glossary of Terms. Retrieved on July 9th, 2006 from
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McDougall, Gilles. (1995). The Economic Impact of Mergers and Acquisitions on Corporations. Retrieved on July 9th, 2006 from$FILE/wp04e.pdf
Week 5 Lecture. (2006). FIN 325 Mergers, Acquisitions, and International Finance. Retrieved from rEsource on July 7th, 2006 from
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