...Introduction Mergers and acquisition (M&A) varies from country to country. Some countries have laws regulating M&A while others don’t. M&A basically is a combination of two or more businesses into one new business. What defines the merger or acquisition is how the combination is brought about. Mergers are usually negotiated between parties before the combination occurs while acquisition does not necessarily have to go through negotiations between parties. Mergers and Acquisition can succeed or fail base on a number of factors. This paper will examine the concept of mergers and acquisition, why M&A fail and possible recommendations Input Businesses sometimes merge or acquire to improve on their competitiveness and to meet their strategic objectives. Mergers and acquisition can come about because of stiff competition in the market or to create economies of scale or to enter new markets, or to diversify or a combination of many factors as mentioned in this sentence. Sometimes the only reason an acquire may purchase a business is for speculative profits, in that the sole purpose is to purchase with the intention to split them into smaller pieces and selling them or parts thereof for a price which is much higher than the acquiring price. Mergers and acquisition can also come about because of management failures. This situation can come about because management was unable to move the company in a positive direction which would have maximize shareholders wealth. Some of...
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...Accounting Scandals: Responsible Stewardship and Integrity AOL Time Warner 1. Summary of the events that led to the accounting scandal. AOL was the major face in the Internet scene for four years, between1994 to 1999, by using aggressive advertising contracts instead of charging subscription fees to their users. When internet advertising became more and more popular, AOL’s stock rose by an extremely large amount. Due to this tremendous response from investors, enhancing revenues in order to keep the stock prices favorable for AOL TW’s stockholders became the core objective of the AOL management and its employees (Cantoria). In 2000, a new company called AOL Time Warner was created when AOL purchased Time Warner for $164 billion. The deal announced on January 10, 2000 and officially filed on February 11, 2000, this merger in which each original company had a creative opportunity to merge into a newly created entity. Immediately before and after AOL’s merger with Time Warner, top executives at the internet company used tricks, contrivances and false transactions to inflate the value of AOL stock while liquidating their shares in a selling frenzy to enrich themselves to the tune of $936 million. 2. The financial accounting that was performed in the scandal. In 2001 and 2002, the company inflated its online advertising revenue by $400 million in connection with transactions with Bertelsmann. Bertelsmann paid $400 million as consideration for amendments to the multi-billion...
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...trafficked Internet retail destinations worldwide. Amazon is one of the first companies to sell products deep into the long tail by housing them all in numerous warehouses and distributing products from many partner companies. . Amazon has direct operations in the United States, Canada, France, Germany, Japan, and the United Kingdom. (CrunchBase, 2011). Amazon.com is a marketing web site which includes information about products, employment opportunities, financial information, and online selling. Amazon.com saves time. It is possible to give an order at any hour of the day or night. Also it allows to customers to register their credit card and shipping information to make future purchases easy. So when they place another order some other time, they need to use their username and password instead of typing all their information again. Time Warner’s AOL In 1989, Warner Brothers merged with the publishing house Time to Time Warner. Time acquired Warner for about US$14 Billion and transformed it into a multi-media company consisting of record labels, motion picture as well as television production and distribution, studio facilities and film libraries, television networks, book and magazine...
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...suggests further analysis is required after the production of a PESTEL analysis. The PESTEL framework was chosen for a few reasons. First, the analysis creates a general map of the external environments of each organization. Second, a fairly significant portion of mergers and acquisitions occur because of external forces. The PESTEL analysis determines the external forces at play for each organization. Third, the PASTEL analysis external forces only qualify if they are defined as a change in the environment. In regards to the America Online and Time Warner merger, a PESTEL diagnostic analysis can be applied to both organizations. First is an overview of the political external environment. Due to the nature of the merger in discussion, the political environment will also include a review of the legal environment. The biggest external factor affecting the potential merger between America Online (AOL) and Time Warner were the anti-trust laws in place to regulate corporate mergers and acquisitions. Anti-trust regulations are in place for many reasons, one of which includes the approval of...
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...Time Warner is the result of the merger in the year 1989, of worth 14$ billion between the two big players: 1. Time was established in the year 1922 and was in magazine publishing business. It was followed by Television Company and acquired American television and Communication Company. 2. Warner Brothers established in the year 1923, was into the film production. In the year 2001, the merger between these two giants was held with the aim “to create the world’s fully integrated media and communication company for the internet century in an all stock combination valued at $350 billion.” This is the largest merger in the history of America (Theierer Adam, January 11, 2010). The merger was carried so as to create the global media powerhouse. Then industry in which they were operating was expanding very fast. The merger was structured as a stock swap. The merger was correct as both the companies lacked the assets crucial for competing and both of them felt that they cannot alone develop the resources quickly so as to compete effectively. Both the companies perceived each other as the complementary strength which resulted in the merger. The companies were correct in their act so as to answer their major competitors such as MSN and Yahoo. AOL entered in the merger so as to sustain its position in the competitive environment. The decision to merge with the durable and profitable company with tangible assets, at the peak of capital value of AOL, was the perfect strategic...
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...5: Strategic Analysis of Time Warner Background: Time Warner, Inc. was formed in 1990 through the merging of Time magazine publisher and Warner Communications. The merger of these two companies brought together different scopes of the media industry, and they hoped to capitalize on the brand equity and marketing aspects contained by each. The purpose for this memo is to look at the different business segments within Time Warner, the strengths and weaknesses of its operations, and a definitive long-term operating strategy that will position them for continued success. Time Warner is one of the largest media companies in the world, but faces tight competition from industry giants like Disney and Viacom. While the company is required to adhere to the restrictions by the Federal Communications Commission, the FCC has been loosening the reigns slightly with regards to the diversification and size of the main media players. The regulation goal of the FCC is to prevent one company from solely influencing the information passing through the airways and entertainment outlets into the mind of consumers. Porter’s Five Forces: In order to carefully formulate the strategies to be employed by Time Warner, a comprehensive examination of each of its business areas needs to be evaluated. Time Warner has five main business lines: AOL, film entertainment, publishing, programming networks and cable systems. We will begin the analysis of T.W. and its merge with AOL, including the consequent...
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...relations, and so on. The determination of the Goodwill is therefore most of the time very subjective. Companies only record the goodwill when there is an exchange transaction the involves the purchase of an entire business. When the company is purchased by another company, the goodwill on the transaction is calculated as follows: the company debits the identifiable acquired assets and credits the liabilities at their fair values, credits cash for the purchase price and finally records the difference as the goodwill. Give examples of companies who own the intangible asset(s) 1. Famous example is Microsoft completed the acquisition of all of the Nokia Devices and Services (“NDS”) in 2013. Microsoft acquired Nokia for $7.2 billion in 2013. This was a huge opportunity for Microsoft as Nokia's products are trustworthy and have goodwill in the market, with the Nokia Lumia, Nokia Asha, etc. Thanks to this merge, Microsoft has increased its level of synergy, goodwill, brand name, better marketing environment and capability to innovate faster (Verma, 2013). The short effect of this merge was seen in Q4, where Nokia service and devices contributed to $1.99 billion to revenues, but it negatively impacted the operating income with $692 million loss (Trefis team, 2014). 2. Infamous example is AOL and Time Warner mergence in 2001. Investors admitted that goodwill was overpaid during the merge of AOL (cable...
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...AT&T Merging with Comcast Tonya Mealey, Teneisha Bonner, and Richard Chan ECON220-X-1302B-02/Professor Luzius July 14th, 2013 Abstract For our group 5 project, we have collected information about the company AT&T merging with Comcast. In this paper, the industry description introduces the company and explains the history of the company. The supportive argument and the argument against the merger are discussed. Keywords: AT&T, Comcast AT&T Merging with Comcast Initially, Comcast proposed to buy AT&T Broadband for 44.5 billion in assets and 13.5 billion in deficit assumption. AT&T’s committee did not accept the acquisition and Comcast offered to merge with AT&T broadband to establish AT&T Comcast. AT&T assets have been dropping and this coalition would probably help them by letting Comcast, which has a great understanding in the broadband business, work with the many resources AT&T has to present. The merger is set at $72 billion. Comcast thinks the coalition with AT&T will keep them rich and it will get 2.2 million broadband consumers and 22 million co responders, news and entertainment supporters. They are evaluating the merger to decide if the aftermath will be an accomplishment or a downfall (Brinkerhoff, 2010). Industry Description: AT&T, is considered to be a telecommunications industry, and is among the world’s premier voice, video, and data communications companies serving millions of consumers, businesses...
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...with plans and thoughts on one basic idea in terms of success, business, and any organization. It is important if you are focusing on being an entrepreneur, and it requires the leadership philosophies of people, passion, and perseverance. Former Chairman and CEO of AOL Steve Case (2010) “state these words as foundation of successful entrepreneurship”. Case’s entrepreneurial life continues with his business enterprise transformation. Its mission “is to partner with entrepreneurs in building business that gives people choices, control and convenience in important area of their life” (Case, 2010).Steve Case (2010) also has passion about our country struggling from economic depression, and knows there is only one thing to get it back on track. Case (2010) suggests “being in process and taking a risk and entrepreneurship.” There is a lot that can be done but the leadership can only do so much, it really requires the private division and the entrepreneurs. Entrepreneurship is not just creating new services to improve people lives or creating values to shareholders or employees (Case, 2010). Case (2010) kept the three P’s in mind when the AOL merge got wrong. Thomas Edison suggests, to summarize the merge in five words “vision without execution is hallucination.” That’s a...
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...Mergers and Acquisitions are sometimes not as successful as the companies would like. The examples that were used in the article were Time Warner and AOL, and Daimier-Chrysler. And all of these mergers were analyzed and all were found to be lacking in the initial management decision and the ultimate decision to merge. The author looks further into mergers themselves and makes the first point that active boards are critical. He describes them as having strategic oversight, accountability, and senior-level staffing and evaluation. However, this article focuses on strategic oversight. The first example he uses was the Enron failure. He analyzed the case and realized that the board had relied far too much on the analysis of the CEO at the time, Kenneth Lay. He goes on to say that the rest of the board placed an excessive amount of trust and that too much trust can be misplaced. Further analysis showed that the votes were almost always unanimous and debates about the answers were very minimal. He goes on to say that boards cannot be passive in decision making because if they are, they are incredibly weak in oversight because going along with the CEO isn’t was governance is supposed to be. The second point the author goes on to make is that independent contrary opinions are necessary. The author goes on to say that in order for it to work, the merger itself must be challenged. Continually, he describes how to get and use independent contrary opinions. Thirdly, the author describes...
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...FUTURE STRATEGIES Disney’s theme park strategy underscores the importance of vertical integration for the company as a means to exert total control not only over the individual segments of the media value chain, but also over the individual value chains of its business units. For example, by owning all elements of the theme park value chain, starting with travel agencies, over food and merchandising, to the accommodation of the parks’ visitors, Disney made sure that all possible revenue streams were channeled into the group without intermediary-related losses. Despite its precarious financial situation, Disney further extended its vertical reach by investing in the development of a new cable venture, The Disney Channel, launched in 1983, which allowed the exploitation of Disney content on the additional distribution platform cable television. Disney also decided to vertically integrate into syndication in order to exploit further revenues by licensing the individual film rights of Disney’s by now extensive television content library to independent television stations. The merger presented substantial benefits for both sides: Miramax gained guaranteed access to Disney’s national and international distribution network, and Disney could increase its content product diversity by securing content of the type that it lacked in its Disney, Touchstone and Hollywood Pictures output (Lyons, 2003). Through the Miramax acquisition Disney increased movie output from 18 films per year...
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...Case study—Paid Time off (PTO) Policies Gerissa Russell B6032 BLA Argosy University/Atlanta Harish Chandan September 17, 2014 Case study—Paid Time off (PTO) Policies Identify any additional information you would need to recommend a solution, and explain where you would likely find that information. Communication is all important. Much communication is needed in a merging procedure internal first and external second. A go-getting communication plan must be published at the outset and managed throughout the process. Communication mode and message will vary for different time frames 48 hours, weekly, monthly, and for different target groups. Key customer management. In order for the M&A to be successful, the smooth handling of ordinary business has to be ensured. The quality of relations with customers of both the acquired and acquiring. Identify key intangible assets and make plans to retain them early. As soon as practical, analyze the target company to identify key managers, specialists and knowledge owners. Who owns the customer relationships, which provides the headship to the team? These are key people who need to be engaged early to ensure their retention. What other unknown talent high potential individuals and teams – exist who will provide new value within the merged business? In a ‘friendly’ merger, gain access to and assess the key people before closing. Discuss any issues you would likely encounter if you were to merge the PTO system...
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...Rashan Daniels American Intercontinental University Unit 1 Individual Project ACCT205 -1303B-02 8/30/2013 Abstract This paper is about accounting it will go over the accounting process it also explains the importance of accounting and also how technology plays apart. This paper will also go over the primary objective of accounting. Welcome The Colony High School today I will talk about what I do for a living I am an Accountant. What is an accountant? What does an Accountant do? I will start with the first question. What is an Accountant? An accountant is an individual who performs accounting tasks for individuals or companies. The exact material that an accountant handles varies depending on the size of the company and the accountant's specialization, but generally includes financial records, taxes, and responsibility for the issuing of financial reports. An accountant is one of the primary figures in a business that he or she works for, whether it is a multinational corporation or a small family owned business.(wisegeek.com) Everyone is an accountant to some extent for example balancing your checkbook going over bank statements to make sure there is on mistakes or making sure your account balance is where it is supposed to. With that being said we are talking about accounting on a bigger level. There are four primary objectives in accounting and I will list and explain all four. The four objectives are maintenance of records and business transactions, calculation...
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...Mergers and acquisitions 1 Mergers and acquisitions The phrase mergers and acquisitions (abbreviated M&A) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly without having to create another business entity. In the most simplest way, Merger can be defined as how a "Marriage" is whereas an Acquisition is referred to as an "Adoption" of a child Acquisition An acquisition, also known as a takeover or a buyout, is the buying of one company (the ‘target’) by another. Consolidation is when two companies combine together to form a new company altogether. An acquisition may be private or public, depending on whether the acquiree or merging company is or isn't listed in public markets. An acquisition may be friendly or hostile. Whether a purchase is perceived as a friendly or hostile depends on how it is communicated to and received by the target company's board of directors, employees and shareholders. It is quite normal though for M&A deal communications to take place in a so called 'confidentiality bubble' whereby information flows are restricted due to confidentiality agreements (Harwood, 2005). In the case of a friendly transaction, the companies cooperate in negotiations; in the case of a hostile deal, the takeover target is unwilling to be bought or the target's board has no prior knowledge of...
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...United States suffered a time in which several large companies engaged in fraudulent behavior which eroded investor confidence in the stock market and to some extent destabilized the economy. Audits, which were conducted to assess the validity and reliability of a company’s financial statements, were not detecting the material misstatements in the statements. As a result, both the US Government and the accounting profession needed to come up with a way to prevent these immense frauds from occurring in the future. As a response to these large frauds, in 2002, the US Government passed the Sarbanes – Oxley Act of 2002 (SOX) and the American Institute of Certified Public Accountants (AICPA) issued Statement on Auditing Standards No. 99(SAS No. 99) to improve investor confidence and the auditing function’s ability to detect material frauds. The intent of this thesis was to look at the fraudulent factors associated with several recent corporate frauds and compare them to the standards set by SAS No. 99. Through the analysis conducted, this thesis looks at the relationships between pressures, opportunities, and rationalizations made during the act of fraud. Table of Contents ABSTRACT ii INTRODUCTION 1 Sarbanes – Oxley Act of 2002 (SOX) 1 Statement of Auditing Standards Number 99 (SAS No. 99) 4 Parts of the Fraud Triangle 5 Types of Fraud 11 INSTANCES OF FRAUD 13 Enron Corporation 13 Adelphia Communications Corporation 17 AOL Time Warner, Inc. 20 Bristol-Myers...
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