Merger acquisition finance paper

The talks are taking place at a time of heightened deal-making in health care across the country, as hospitals, physician groups, insurers, and other companies pursue new strategies to manage costs and patient care. Its expansion plans have been scrutinized in the past because the company is the most dominant health care provider in Massachusetts, and among the most expensive. Schultz, said in an interview. Schultz said the discussions grew from regular contract negotiations between the two companies.

Merger acquisition finance paper

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Cash[ edit ] Payment by cash. Such transactions are usually termed acquisitions rather than mergers because the shareholders of the target company are removed from the picture and the target comes under the indirect control of the bidder's shareholders. Stock[ edit ] Payment in the form of the acquiring company's stock, issued to the shareholders of the acquired company at a given ratio proportional to the valuation of the latter.

They receive stock in the company that is purchasing the smaller subsidiary. Financing options[ edit ] There are some elements to think about when choosing the form of payment. When submitting an offer, the acquiring firm should consider other potential bidders and think strategically.

The form of payment might be decisive for the seller.

Merger acquisition finance paper

With pure cash deals, there is no doubt on the real value of the bid without considering an eventual earnout. The contingency of the share payment is indeed removed. Thus, a cash offer preempts competitors better than securities.

Taxes are a second element to consider and should be evaluated with the counsel of competent tax and accounting advisers. If the issuance of shares is necessary, shareholders of the acquiring company might prevent such capital increase at the general meeting of shareholders.

The risk is removed with a cash transaction. Then, the balance sheet of the buyer will be modified and the decision maker should take into account the effects on the reported financial results. On the other hand, in a pure stock for stock transaction financed from the issuance of new sharesthe company might show lower profitability ratios e.

However, economic dilution must prevail towards accounting dilution when making the choice. The form of payment and financing options are tightly linked. If the buyer pays cash, there are three main financing options: There are no major transaction costs.

It consumes financial slack, may decrease debt rating and increase cost of debt. Transaction costs include fees for preparation of a proxy statement, an extraordinary shareholder meeting and registration.

If the buyer pays with stock, the financing possibilities are: Issue of stock same effects and transaction costs as described above.

Transaction costs include brokerage fees if shares are repurchased in the market otherwise there are no major costs. In general, stock will create financial flexibility. Transaction costs must also be considered but tend to affect the payment decision more for larger transactions. Finally, paying cash or with shares is a way to signal value to the other party, e.

The following motives are considered to improve financial performance or reduce risk: This refers to the fact that the combined company can often reduce its fixed costs by removing duplicate departments or operations, lowering the costs of the company relative to the same revenue stream, thus increasing profit margins.

This refers to the efficiencies primarily associated with demand-side changes, such as increasing or decreasing the scope of marketing and distribution, of different types of products.

Increased revenue or market share: This assumes that the buyer will be absorbing a major competitor and thus increase its market power by capturing increased market share to set prices. For example, a bank buying a stock broker could then sell its banking products to the stock broker's customers, while the broker can sign up the bank's customers for brokerage accounts.

Or, a manufacturer can acquire and sell complementary products. For example, managerial economies such as the increased opportunity of managerial specialization. Another example is purchasing economies due to increased order size and associated bulk-buying discounts.

A profitable company can buy a loss maker to use the target's loss as their advantage by reducing their tax liability.Jun 12,  · Yahoo Finance's Morning Brief.

Top headlines and a preview of the day ahead delivered to your inbox every weekday by a.m. ET. The Merger and Acquisition of Nigerian Banks From Till Date.

Merger and Acquisition of Nigerian Banks – Merger according to Oxford Advanced Learner’s Dictionary 7 th ed. Is the act of joining two or more organizations or businesses into one.

M&A is in our DNA. Bain has partnered with clients for 40 years on more than 10, M&A-related projects. Nearly half our strategy projects involve M&A, and our merger integration clients realize around 18% more share¬holder value than typical mergers.

With a 22% slide so far, November could be the worst month for GE stock since February , when it fell 30%. The value in mergers and acquisitions is undisputed.

Bain & Company analysis of deals over an year period has shown that as a group, companies that engaged in M&A activity averaged higher shareholder returns than inactive companies. Wachovia was a diversified financial services company based in Charlotte, North regardbouddhiste.com its acquisition by Wells Fargo and Company in , Wachovia was the fourth-largest bank holding company in the United States, based on total assets.

Wachovia provided a broad range of banking, asset management, wealth management, and corporate and investment banking products and services.

Partners HealthCare, Harvard Pilgrim discussing possible merger - The Boston Globe