Merger: Classification and motives

Mergers and acquisitions - is consolidation of capital and business, which takes place at the level of macro- and microeconomics.As a result of these processes disappear from the market is not very large company, but instead appear larger.

merger - a combination of several entities to form a new unit in the economy.It meets three kinds:

1) Merger of assets.The owners of the companies involved in the merger, transfer (as a contribution to) the right to control their organization.But while companies continue to operate and retain all rights.

2) The merger forms.Companies merged into one, will not be legal entities and taxpayers.Assets and liabilities before clients begin to manage the new, newly established organization.

3) Accession.In this case, some of the combined companies operate as before, and the others cease to exist, all of their responsibilities and rights are transferred to the rest of the organization.

Absorption - it's such a deal, which is made with the intention to establish control over a business entity.It is considered concluded, when you buy more than 30% of the shares of the company that absorbed.

merger : Classification

By the nature of the integration of firms allocate:

1) Vertical merger.This association of several companies in which one of them provides the raw material for another.Production costs, of course, in this case falls sharply and earnings, respectively, increases.

2) Horizontal merger.Uniting such companies that produce the same goods.Together, they can develop better, significantly reduced competition.

3) Parallel merger.Brings together companies that produce products linked.For example, one company produces printers, and the second - to paint them.

4) Circular merger.Unite firms that are unrelated relations of production and marketing.

5) Reorganization - the merger of these companies, which are involved to varying business sectors.

Depending on how the company's management refers to the transaction are:

1) hostile merger.

2) friendly.

merger : motives transaction

They are built on the basis of conflict between the interests of the manager and the owner.And not always at the same time take into account the economic feasibility.So, there are the following reasons:

1) Commitment to continuous growth.

2) Individual motives manager.

3) The increase in the scale of production.

4) The desire to provide positive indicators for a short period.

impact on the economy

Most economists argue that the merger and takeover - it is not unusual for a market system.Moreover, such a permutation is even useful to prevent stagnation and make the business more efficient.But not all think so.Some executives of firms claim that the absorption and merger is absolutely not conducive to the economic development of the nation.They, on the contrary, make the competition unfair means and not distract the progress, and real-time protection and control.