(MENAFNEditorial) google_ad_client = "pub-7060895361757846"; /* MPR 200x200, created 7/14/10 */ google_ad_slot = "9848691929"; google_ad_width = 200; google_ad_height = 200; Merger and Acquisition are widespread commercial terms that are meant for business development and solidification of business resources. Whereas in determination of a companys portfolio, its asset position, volume of business and rate of growth are considered as the main aspects, both the business processes mergers and acquisitions help enterprises attain the same. The basic difference among merger and Acquisition is that while merger refers to coupling or joining of two different companies with a view to form a new business enterprise, an acquisition talks about takeover of a company. In this process a company purchases another company and captures it whilst no new enterprise is formed.
In the new business age, merger and acquisition are quite in vogue and either of the procedure is undertaken to meet varied goals. For example, two big pharmaceutical companies or computer manufacturing enterprises combine and make a giant business endeavor with a different company name. It, is at the same time, a big profile business house may buy other company in profit making condition or under bankruptcy and acquire the same with all its assets and liabilities. Both mergers and acquisitions in south Africa encompass a series of procedural phases, major of which are evaluation/consolidation, tender offers, meeting of liabilities or purchase of assets or acquisition of existing management.
The processes are discussed below:
Merger
When it comes to merger, once the board members of two business groups agree for merger, they take approval of stakeholders for advancement of the process. The acquired business enterprise ceases its operation and it turns into a part of the acquiring house.
Acquisition
In course of acquisition, the acquiring group acquires the majority share of the firm acquired, however; typically the acquired companys name or legal framework is not changed. Thus, both companies operate in the industry with distinct name and legal identify but under the same industrialist or management. Sometimes, following acquisition, the acquiring house may form a fresh new company also, at its own judgment by offering equity shares of the new company to its stockholders.
The major steps of merger and acquisition process are as follows
1. One company can offer proposal for buying stocks of another business house at certain specific rate. They can send offer directly to the houses shareholders and it is no mandatory to communicate the same to its management or board members. In case the major part of shareholders disagrees; the procedure cannot go forward.
2. In the buying process, one business house acquires all assets of the second company. For this, it should obtain shareholders approval. Typically, the company getting sold is considered liquidated once the transfer process of assets is finished. The acquiring company is supposed to talk to creditors of acquired company and settle their accounts.
3. The final step is management acquisition. This is done, once the purchasing company takes control of the other by obtaining its major stake.
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