strategic aspeect of acquisition

demosns the business acumen

guide you through the content in

regulatory framework for mergers and acquisitions

principle factors

weather we want to set up the acquisition and how could we pay for the acquisition

teminology

terminologies of acquisition

synergy: 1+1>2

horizontal integration:

same business line entity comnime, bottle drink water amd cola...... pen and pencil...

vertical intergration:

industry line, differnce lvel in supply chain business combine.  manufacture and raw material, product matufacture and logistics 

conglomeratisation

no relevant business, as risk diversify trategies

conglomerate

horizonal   & vertical integration

synergy: revenue, cost, financial and other synergy

forms of acquiring:

1. straight cash offer

target shareholders lose the opportunity for future growth and synergies

expensive for bidder, may change gearing

2. earn out bidding

pay if the target synergy achieves

3. share to share 

prre-bidding defence:

poison pills:

revalue its assets to reduce on the undervalued

conceal or pre-sale its asset 

post-bidding defence 

whit knights

forms of consideration:

stright cash offer:

advantages, simple and quick

disadvantage: target company lost the opportunity for future growth interest

enquire: heavy cash flow burden, may change its gearing for borrowing or asset sale

earn out offer:  meet profit target, opportunity for future grwoth benefit

shange to share exchange

reduce gearing, participate future growth, not lost all control, share future synergy from merger  vaital 

share to share:

• value bidder
• value target
• value the combined entity
• calculated number of shares
• calculate the new share price