Mergers and Acquisitions:
Each merger or acquisition goes by a learning procedure of its own. If managed properly, mergers and acquisitions (M&A) could help the organisation take a path of growth & prosperity. Here, we describe mergers and acquisitions, in brief.
Mergers and acquisitions reached at the new heights within the 1990s which eclipses the peaks set in the 1980s. That period witnessed the development of the most unusual merger wave in the US economic history. Huge scale mega mergers became common area. Hostile deals captured media headlines on a regular basis. This wave collapsed in 1980s and several of the highly leveraged deals of which period became fashionable in the early in the year of 1980s. Therefore, just while it appeared which the frantic pace of mergers had clearly ended, the trend got reversed and a new period of M&A began in the year of 1993. These periods are characterised through cyclic activity, which is, high levels of merger followed through a period of associated few mergers.
Mergers are frequent categorised as horizontal, vertical & conglomerate mergers.
A horizontal merger occurs while two competitors combine. The Hewlett Packard and Compaq merger is an instance of horizontal merger. If a horizontal merger causes the merge firm to experience an increase in market power that will have anti competitive effects, the merger might be opposed on anti trust grounds. In recent years, thus, governments all over the world have been liberal in permitting several horizontal mergers to take place unopposed.
A vertical merger is a merging of organizations which have a buyer-seller relationship. Merck, the world's largest drug company obtained Medco, the largest marketer of discount prescription medicines in the U.S. This is an instance of vertical merger. This transaction enabled Merck to be not only the largest pharmaceutical organization but also the largest integrated producer and distributor of pharmaceuticals. This transaction too was not opposed through anti trust regulators even by the combination clearly resulted in a more powerful firm.
A conglomerate merger occurs while the companies are not competitors and do not have a buyer-seller relationship. For example, Phillip Morris, a tobacco company obtained common foods and these companies were in extremely variant lines of business.