{"id":9459,"date":"2020-03-12T08:30:38","date_gmt":"2020-03-12T03:00:38","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=9459"},"modified":"2020-04-14T15:44:29","modified_gmt":"2020-04-14T10:14:29","slug":"what-are-the-different-types-of-mergers-and-acquisitions","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/what-are-the-different-types-of-mergers-and-acquisitions\/","title":{"rendered":"What are the different types of Mergers and Acquisitions?"},"content":{"rendered":"\n<p class=\"has-drop-cap\"> The corporate world is extremely dynamic and evolves in every hour of the day. New technologies engulf old and outdated schemes. Thus, they challenge business models to either incorporate the latest techniques or retreat from the industry.  An efficient way to persist in the corporate sphere is by enlarging the business through <strong><a href=\"https:\/\/swaritadvisors.com\/mergers-and-acquisitions\">Merger and Acquisition<\/a><\/strong>.  It is a potent tool for small scale Companies to reinforce their business structures. This write-up is a guide about various insights of Mergers and Acquisitions.  <\/p>\n\n\n\n<div class=\"wp-block-button aligncenter\"><a class=\"wp-block-button__link has-background has-vivid-cyan-blue-background-color\" href=\"https:\/\/swaritadvisors.com\/mergers-and-acquisitions\">Preparing the agreement related to mergers and acquisitions &#8211; Apply Now<\/a><\/div>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a77021a976\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a77021a976\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/what-are-the-different-types-of-mergers-and-acquisitions\/#Decoding_the_terms_Mergers_and_Acquisitions\" title=\"Decoding the terms Mergers and Acquisitions  \n\">Decoding the terms Mergers and Acquisitions  \n<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/what-are-the-different-types-of-mergers-and-acquisitions\/#Advantages_of_Mergers_and_Acquisitions\" title=\"Advantages of Mergers and Acquisitions\">Advantages of Mergers and Acquisitions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/what-are-the-different-types-of-mergers-and-acquisitions\/#Types_of_Mergers_and_Acquisitions\" title=\"Types of Mergers and Acquisitions\">Types of Mergers and Acquisitions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/what-are-the-different-types-of-mergers-and-acquisitions\/#Factors_for_Company_Acquisition\" title=\"Factors for Company Acquisition\">Factors for Company Acquisition<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/learning\/what-are-the-different-types-of-mergers-and-acquisitions\/#Process_of_Mergers_and_Acquisitions\" title=\"Process of Mergers and Acquisitions \n\">Process of Mergers and Acquisitions \n<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/learning\/what-are-the-different-types-of-mergers-and-acquisitions\/#Conclusion\" title=\"Conclusion \n\">Conclusion \n<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Decoding_the_terms_Mergers_and_Acquisitions\"><\/span>Decoding the terms Mergers and Acquisitions  \n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Mergers and Acquisitions are mostly\nused by entrepreneurs to restructure their organizations. It shares\nthe sole objective of business expansion and often helps Companies to\nattain success in a short period. Both refer to the consolidation of\nCompanies, yet they differ on the implementation front, such as:<\/p>\n\n\n\n<p><strong>Merger: <\/strong> In Merger, two or more Companies combine to build a single entity for mutual benefit. In the <strong><a href=\"https:\/\/en.wikipedia.org\/wiki\/Mergers_and_acquisitions\">Merger Agreement<\/a><\/strong>, both parties negotiate on terms and conditions of how powers shall be shared after the formation of a new entity. Generally, the Companies involved in Merge relish an equal treatment.   <\/p>\n\n\n\n<p><strong>Acquisition:  <\/strong>In an\nAcquisition,one Company gains authority over other Company by\npurchasing its assets. It can be a Voluntary Takeover or Hostile in\nnature. In the process of Acquisition, the Acquirer Company buys the\nTarget Company; thereby, its identity gets dissolved completely.    \n<\/p>\n\n\n\n<p>An entrepreneur can choose from\nseveral types of Mergers and Acquisitions based on the needs of the\nbusiness. Since both techniques accentuate organic business growth\nand development, it is beneficial for startups and mid-scale\nCompanies.  \n<\/p>\n\n\n\n<div class=\"browse\">\n<p>Browse through our articles on services provided at <a href=\"https:\/\/swaritadvisors.com\">Swarit Advisors<\/a>, and just let us know if we can help you with your IPO or Comapny Takeover or SEBI Advisory Services.<\/p>\n<div class=\"browse1\">\n<table class=\"table1\">\n\n<tbody>\n<tr>\n<td><a href=\"https:\/\/swaritadvisors.com\/mergers-and-acquisitions\"><span>Mergers and Acquisitions<\/span><\/a><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/buyback-of-shares\"><span>Buyback of Shares<\/span><\/a><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/merger-and-amalgamation\"><span>Merger and Amalgamation<\/span><\/a><\/td>\n<\/tr>\n<tr>\n<td><a href=\"https:\/\/swaritadvisors.com\/public-issues\"><span>Public Issues<\/span><\/a><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/rights-issue\"><span>Rights Issue<\/span><\/a><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/preferential-allotment\"><span>Preferential Allotment<\/span><\/a><\/td>\n<\/tr>\n<tr>\n<td><a href=\"https:\/\/swaritadvisors.com\/company-takeover\"><span>Company Takeover<\/span><\/a><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/issue-of-debentures\"><span>Issue of Debentures<\/span><\/a><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/insurance-broker-license\"><span>Insurance Broker License<\/span><\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Advantages_of_Mergers_and_Acquisitions\"><\/span>Advantages of Mergers and Acquisitions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>There are many strategic reasons for\neach Merger and Acquisition apart from a rapid progression of the\nbusiness, such as:<\/p>\n\n\n\n<ul><li><strong>Access to competent skills\n\tand technology- <\/strong>The central purpose of any Merger and\n\tAcquisition is to fill in the gaps between the shortcomings and\n\tgoals with efficient skills. By merging or acquiring a potential\n\tbusiness entity, Companies obtain the required skills and get\n\texposure to advanced technology.  \n\t\n\t<\/li><li><strong>An economy of scale- <\/strong>Another\n\tmajor benefit of M&amp;A is that it helps to create economies of\n\tscale which further generates cost-efficient\n\tresults. When two Companies combine, the production takes place on a\n\tlarge scale which in turn boosts the production and reduces its\n\tcost. M&amp;A also streamlines the operations due to the integration\n\tof resources. \n\t\n\t<\/li><li><strong>Diversification of products-\n\t<\/strong>Through Merger and Acquisition, a Company can experiment with a\n\tvariant product line and enter into a broader market that has good\n\tsales opportunities. \n\t\n\t<\/li><li><strong>Optimal use of finances-<\/strong>\n\tThe merged Company can deploy various innovative plans with abundant\n\tcollective finances and resources. When proficient resources work\n\ttogether, they discover the best ways for optimal utilization of\n\tfunds.  \n\t\n<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Types_of_Mergers_and_Acquisitions\"><\/span>Types of Mergers and Acquisitions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Merger and Acquisition differ in implementation and are divided into separate categories. Let\u2019s look at <strong>different forms of Mergers and Acquisitions<\/strong>:<\/p>\n\n\n\n<ul><li><strong>Horizontal Merger<\/strong><strong>&#8211;<\/strong>\n\tIt occurs when two or more Companies of the same industry merge to\n\tform a single entity. Often such Merger happens amongst competitors\n\tthat aim to reduce costs and gain a larger share of the market.\n<\/li><\/ul>\n\n\n\n<ul><li><strong>Conglomerate\n\tMerger-<\/strong>&nbsp;This\n\tkind of Merger&nbsp;takes place when two Companies of entirely\n\tdifferent industries merge to share their assets with each other or\n\tto reduce business risk.\n\t<\/li><li><strong>Product\n\textension Merger<\/strong><strong>&#8211;<\/strong> It refers to the union of those\n\tCompanies that belong to the same market and sell related products.\n\tSuch a Merger intends to increase profits by clubbing their products\n\t&amp; services to access a bigger market. \n\t\n\t<\/li><li><strong>Market\n\textension Merger<\/strong><strong>&#8211; <\/strong>When two or more businesses sell\n\tthe same products &amp; services in discrete markets merge to create\n\ta larger customer base, it is known as Product extension Merger.\n\t<\/li><li><strong>Vertical Merger-<\/strong> In this\n\tMerger, two or more Companies unite that are involved in the supply\n\tchain of a common product\/service to increase efficiency.\n<\/li><\/ul>\n\n\n\n<div class=\"read\"><p><b>Also, Read:<\/b> <mark><a href=\"https:\/\/swaritadvisors.com\/learning\/what-are-the-things-to-consider-while-planning-mergers-and-acquisitions-in-financial-institutions\/\" target=\"_blank\" rel=\"noopener noreferrer\">Mergers and Acquisitions in Financial Institutions<\/a><\/mark>.<\/p><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Factors_for_Company_Acquisition\"><\/span>Factors for Company Acquisition<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Unlike Merger, in an Acquisition,\nthe Acquirer Company has more power than the Target Company and it\noccurs under different circumstances like: \n<\/p>\n\n\n\n<ul><li><strong>Consolidating-\n\t<\/strong>It is a situation wherein, an Acquirer Company takes over the\n\tTarget Company to reduce competition from an over-supplied market.\n\t<\/li><li><strong>Accelerating-<\/strong>\n\tA condition in which a large scale Company purchases a small Company\n\tto leverage its resources and accelerate market access.\n\t<\/li><li><strong>Resource\n\tacquiring- <\/strong>As the name suggests, it is a type of Acquisition\n\twhen a Company Takeovers other Companies to gain skillful resources,\n\ttechnologies, intellectual property to stabilize its market\n\tposition. It is very cost-effective for a Company than to develop\n\tits resources from scratch.\n\t<\/li><li><strong>Speculating-<\/strong>\n\tIt occurs when a large Company acquires a small Company which offers\n\ta new product in a bid to capitalize on its future growth potential.\n\t<\/li><li>&nbsp;<strong>Value\n\tcreation<\/strong>&#8211;&nbsp;Under\n\tthis condition, an Acquirer Company purchases another Company to\n\timprove its performance and market position and sell it for a\n\tprofit.\n<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Process_of_Mergers_and_Acquisitions\"><\/span>Process of Mergers and Acquisitions \n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Regardless of the types of Mergers\nand Acquisitions you choose for your business type, the procedure\nremains the same. Undertake the following steps for Merger and\nAcquisition:  \n<\/p>\n\n\n\n<ul><li><strong>Develop M&amp;A Strategy-\n\t<\/strong>Before directly hopping onto the process, one must create a\n\tstrategy. Identify your purpose, capital requirement, type of\n\ttransaction that you want to incur in Merger and Acquisition.\n\t<\/li><li><strong>Identify potential\n\tCompanies-<\/strong> After setting a strategy, now you need to conduct\n\tthorough market research to find a suitable Target Company. It\n\tshould be figured out that whether merging or acquiring the chosen\n\tCompany shall provide the expected results or not. \n\t\n\t<\/li><li><strong>Exchange information- <\/strong>Once\n\tthe Target Company signs the Letter of Intent and Confidential\n\tAgreement, it\u2019s time to exchange information like financial\n\trecords, Company history etc.  \n\t\n\t<\/li><li><strong>Valuation analysis-<\/strong>\n\tBased on the provided information, evaluate the potential growth of\n\tthe Target Company and reconsider your decision of M&amp;A.\n\t<\/li><li><strong>Negotiate and offer-<\/strong>\n\tAfter full contentment, propose a reasonable offer to the\n\tshareholders of the Target Company. Therefore, both Companies can\n\tnegotiate on common terms. \n\t\n\t<\/li><li>&nbsp;<strong>Due Diligence<\/strong><strong>&#8211;<\/strong>&nbsp;Its\n\ttime to assess each aspect of the Target\n\tCompany from different perspectives like customer base, financial\n\tbooks, products, human resources etc. The object is to ensure that\n\tthere is no discrepancy in the information based on which the offer\n\thas been made. In case of any discrepancy, you can revise the bid\n\twhich justifies the actual state of the Target Company.\n\t<\/li><li><strong>Draft Purchase and Sale\n\tAgreement- <\/strong>When everything settles down; draft a final Agreement\n\tthat states the cash or stock which shall be given to the\n\tshareholders of the Target Company.\n\t<\/li><li><strong>Closure and integration of\n\tthe deal- <\/strong>Finally,both\n\tthe parties will close the deal and sign the necessary documents.\n\tThe operational and management teams of both the Companies will work\n\ttogether to integrate into the merged entity.\n<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion \n<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p> It entirely depends on your business structure, size and objective to select amongst the various\u00a0<strong>types of Mergers and Acquisitions<\/strong>. The Government strictly regulates the process of M&amp;A. Therefore, a Company needs to go through an extensive approval procedure. If the Government considers a transaction to be against the public interest, then it will disapprove the M&amp;A deal.<\/p>\n\n\n\n<p>To bypass such a situation, you can take guidance from a reputed legal consultancy like Swarit Advisors.\n\n<\/p>\n\n\n\n<div class=\"read\"><p><b>Recommended Post:<\/b> <mark><a href=\"https:\/\/swaritadvisors.com\/learning\/what-is-the-difference-between-merger-acquisition-and-amalgamation\/\" target=\"_blank\" rel=\"noopener noreferrer\">Difference between Merger, Acquisition, and Amalgamation<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The corporate world is extremely dynamic and evolves in every hour of the day. New technologies engulf old and outdated schemes. Thus, they challenge business models to either incorporate the latest techniques or retreat from the industry. An efficient way to persist in the corporate sphere is by enlarging the business through Merger and Acquisition. [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":9464,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[546],"tags":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/9459"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=9459"}],"version-history":[{"count":11,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/9459\/revisions"}],"predecessor-version":[{"id":10025,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/9459\/revisions\/10025"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/9464"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=9459"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=9459"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=9459"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}