Mergers and Acquisitions

Merger and acquisition is a term normally used to explain the consolidation of firms. Whenever two corporations come together to form one unit, it is referred to as a merger. On the other hand, an acquisition is the purchase of one company by the other. Acquisitions and mergers are crucial components when it comes to strategic management. The aim is normally to maximise profits, get a bigger proportion of the market share and help the companies grow faster.For example, in Malta, business combinations are normally structured in different ways with the most common ones being:

• Shares transfer
• Merger by acquisition
• Subscribing to new issues of shares
• Agreements based on joint ventures
• Merger by the creation of a new corporation

Acquisition Parties

• The target firm/company- is the corporation getting acquired
• The acquirer company- firm acquiring the target

In case of a merger by acquisition, the acquirer company gets access to all the liabilities, rights, assets and obligations of the target firm. This makes the shareholders of the target firm become the acquirer’s shareholders.

Types of Mergers

Mergers are normally divided into 3 types:

• Horizontal Merger

This takes place when both the corporations deal with the same kind of business, which means that they are competitors.

• Vertical merger

In this case, the companies are in the same kind of business but at different production stages. A good example is how Microsoft acquired Nokia in order to support its software and offer the required hardware for their smartphones.

• Conglomerate Merger

This kind of merger happens to companies that are in different lines of business and in most cases, such mergers happen to spread risks and diversify when the current business cannot yield enough profits.Before companies can merge, they need to consult a merger and acquisition attorney since the process can be complicated. There are many legal, financial and structural aspects that need to be evaluated and negotiated before the merger can go through. A company like GTG Advocates helps companies finalise mergers smoothly by offering legal advice.

The Value Proposition

A value proposition is another term for how attractive your company is to outside investors and existing stakeholders. These individuals always want to know their expected ROI (return on investment). This proposition includes such essential metrics as growth predictions, sales projections and future ventures.

Financial Staff

Any company planning to venture into the public arena needs to have a robust financial department firmly in place. Not only will this help to avoid any potential pitfalls, but many regulatory bodies now stipulate that this is one of the requirements to qualify for a public listing. It is wise to research this further in regards to the market where you intend to list. Other variables such as the market cap of a firm may play a role. Experienced professionals such as www.gtgadvocates.com will provide you with further insight.

Transparency Issues

Another area to be concerned with involves the transparency guidelines which public companies are now obliged to respect. How comfortable are you (and your staff) with such regulations? Stock prices, potential mergers and other issues will now have to be clearly addressed.

Market Volatility

Any public company is naturally exposed to the volatility of the open market. Will the firm in question be able to supersede a protracted financial downturn or would such exposure prove risky in terms of ongoing operations? Smaller firms may have difficulty adjusting to turbulent times or a sudden downturn. This is one of the primary reasons why many companies only choose to “float” during an optimistic market. It is wise to consult with the primary investors to determine whether they are averse to such a risk or they are keen on a more liquid position.Floating a company on a public market is an important step during its lifespan. Being prepared and appreciating the potential risks that are involved will help anyone to position themselves on the road to success.

Track Shares Manually

You can check the change in price of shares daily either through the business pages of a national newspaper or through the Internet. News channels usually also provide you with information on current share prices. Checking the daily price of your stocks will give your greater insight into your investments and the market as a whole.

Use Stock Tracking Applications

You can keep a tab on the stock market by using special apps to help you keep track of different investments. Some apps are freely available, while others may involve a small fee. Popular apps for checking the stock market include Stockwatch, Bloomberg+ and Yahoo Finance.

Obtain Charting Software

Many companies provide you with special software to track different stocks in your portfolios. Google finance is a type of charting software that helps you track and manage your shares. Similarly, Yahoo finance will display the statistics of the stock market for most companies. This software will display charts to give you a overview of the share value of any company you’re looking for.

Keep An Eye on the Economy

To keep a tab on the stock market, you have to compare it in relation to the performance of the entire economy. Log into news websites and keep track of everything going on in your local market and how it compares to the situation of the global market. Log on to research websites that study economies and keep track of what is happening to protect your investments.The stock market can be highly unpredictable and can even change by the minute. You must be a vigilant investor to gain better returns. Keep yourself updated with market movements and fluctuations by using these smart tips.