Table of Contents
1. Introduction
2. Typology of mergers兼并
3. Reasons to acquire收购companies
4. Integration process
5. Quantifying定量the value of an acquisition收购
Typology of mergers & acquisitions
Different forms of acquisitions:
One possibility is literally字面意思to merge the two companies, in which case one company automatically自动assumes all the assets and all the liabilities of the other
Such a merger must receive the approval许可of at least 50% of the shareholders of each firm
An alternative选择性is simply to buy the seller's stocks in exchange for cash, shares or other securities 证劵
In which case the acquirer收购方will deal individually单独with the shareholders of the selling company
A third approach is to buy some or all of the seller's assets
In this case, ownership of the assets need to be transferred and payment is made to the selling firm rather than directly to its shareholders
Merger accounting
If company A buys company B at a market value which is superior to its book value, company A paid a premium
Company A will show in its consolidated accounts an amount of goodwill equivalent to the premium paid
Typology of mergers & acquisitions
Merger Accounting
The premium can be justified by a licence not valued in company B balance sheet or a promising product or technology
Company A will be obliged each year to estimate the fair value of the goodwill and if it falls below the premium, the amount on the balance sheet must be adjusted downward and the write-off deducted from that year's earnings (goodwill impairment in the profit & loss statement)
Tax Considerations
If payment is in the form of cash, then the selling shareholders are treated as having sold their shares and will pay tax on capital gains
If payment is largely in the form of shares, the acquisition is tax-free and the shareholders are viewed as exchanging