Acquiring another company

This can create an unwieldy name, as in the case of PricewaterhouseCooperswhich has since changed its brand name to "PwC".

types of acquisition

In addition, many of these mergers were capital-intensive. To gain new technology. Also, the high price set by the cartel would encourage new firms to enter the industry and offer competitive pricing, causing prices to fall once again.

Acquiring another company

Use your lawyer as an advisor rather than a gatekeeper. Take the time to do it right so that everyone on both teams gets comfortable and you determine where synergies exist. However, this does not always deliver value to shareholders see below. Companies acquire other companies for various reasons. Are there internal conflicts and so forth? Resource transfer: resources are unevenly distributed across firms Barney, and the interaction of target and acquiring firm resources can create value through either overcoming information asymmetry or by combining scarce resources. Other types[ edit ] However, on average and across the most commonly studied variables, acquiring firms' financial performance does not positively change as a function of their acquisition activity. Corporate lawyers can always find a reasons NOT to do something. There are several reasons for this to occur. Do your due diligence. A company may file an anti-trust lawsuit against the acquiring firm in an attempt to defend itself from takeover, or restructure its assets and liabilities to prevent another company from financially benefiting from a takeover.

Geographical or other diversification: This is designed to smooth the earnings results of a company, which over the long term smoothens the stock price of a company, giving conservative investors more confidence in investing in the company.

This is especially common when the target is a small private company or is in the startup phase.

acquisition examples

The last step involves filing a day acquisition notice with the Securities and Exchange Commission and the target firm's board of directors.

Perhaps a company met with physical or logistical constraints or depleted its resources. A good acquisition target will have clear, well-organized financial statements, which allows the acquirer to exercise due diligence smoothly. Acquisitions Companies acquire other firms to increase their market share, obtain new facilities and acquire advanced technology.

Merging companies

If so, sign up for the free Sales Source newsletter. Or, a manufacturer can acquire and sell complementary products. Acquisitions, which are very common in business, may occur with the target company's approval, or in spite of its disapproval. Redundancies can lead to firing many employees in order to save on costs, resulting in the loss of talent and the disruption of company cultures and partnerships that would otherwise have benefited the organization. Brand decision-makers essentially can choose from four different approaches to dealing with naming issues, each with specific pros and cons: [30] Keep one name and discontinue the other. Will they fit with our corporate culture? The entrepreneurial spirit can also drag when it becomes too satisfied, which can lead to less executive work hours and more time on the golf course. After the valuation process, a company must determine how much the target company is worth, and the best way to raise the resources needed for the acquisition. Consistency with Your Branding Message In addition to core values, think through branding. It's much easier to succeed with a team of quality players that one selects deliberately rather than try to win a game with those who randomly show up to play. To reduce excess capacity and decrease competition. After a merger, the vertically integrated firm can collect one deadweight loss by setting the downstream firm's output to the competitive level.
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Acquisition Definition