Mergers and Acquisitions

This article discusses the concept and procedure of mergers and acquisitions. It explains the different types of mergers, the benefits of mergers, and the legal requirements for mergers.

Questions

• What are the benefits of mergers?
• What are the different types of mergers?
• What are the legal requirements for mergers?

Answers

• The benefits of mergers include:
  • Efficient allocation of managerial capabilities and infrastructure
  • Risk reduction
  • Cost reduction
  • Consolidation of economies of scale
  • Access to scientific research and technological developments
  • Elimination of disadvantages and acquisition of advantages
  • Development of core competencies
  • Limiting competition
  • Market leadership
  • Taxation or investment incentives
• The different types of mergers are:
  • Absorption merger
  • Consolidation merger
  • Horizontal merger
  • Vertical merger
  • Conglomerate merger
• The legal requirements for mergers vary from country to country. In India, mergers are governed by the Companies Act, 1956.