Based on a survey study, approximately 83% of the responders agree that entering into a merger and acquisition could become unsuccessful when it comes to generating business benefits related to the shareholder value. (Kelly, Cook, &. Spitzer, 1999)
Many people are often confused by the phrase merger and acquisitions. Basically, merger is totally different from acquisition in so many aspects. In order to give us a better insight with regards to mergers and acquisitions, it is best to first define each of the term used in the phrase followed by discussing the theory of merger and acquisitions. the types of merger and acquisitions. and the impact of merger and acquisitions on the UK labor market. Prior to the conclusion, the researcher will also provide several UK-based real-life examples of companies that have entered into a merger and acquisition contract.
Merger – combination of two or more business entities into one via purchase acquisition or a pooling of interests (InvestorWords, 2008). A corporate law on joinging togather of two corporations wherein one corporation transfers all of its assets to the other. (Hill &. Hill, 2005)
With regards to the benefit attached with the merger and acquisition transaction. the offeror1 and offeree2 companies should develop a fair value for each of the company’s shareholders. The company shareholders are not limited to the owner of the business but also its existing employees and stockholders.
When a company decides to expand its business operations either through acquisitions or mergers, the company is able to gain the benefits of having better economies of scale in order to meet the market demand.
Economies of scale is necessary in the profitability strategy of the company since it will enable them to save more money in line with the fixed operational cost. By doing so, the company will be able to produce their products and services at a much affordable market price.