Page 115 - DMGT545_INTERNATIONAL_BUSINESS

International Business

notes International mergers and acquisitions are performed for the purpose of obtaining some
strategic benefits in the markets of a particular country. With the help of international mergers
and acquisitions, multinational corporations can enjoy a number of advantages, which include
economies of scale and market dominance.
International mergers and acquisitions play an important role behind the growth of a company.
These deals or transactions help a large number of companies penetrate into new markets fast
and attain economies of scale. They also stimulate foreign direct investment or FDI.

The reputed international mergers and acquisitions agencies also provide educational programs
and training in order to grow the expertise of the merger and acquisition professionals working
in the global merger and acquisitions sector.
The rules and regulations regarding international mergers and acquisitions keep on changing
constantly and it is mandatory that the parties to international mergers and acquisitions get
themselves updated with the various amendments. Numerous investment bank professionals,
consultants and attorneys are there to offer valuable and knowledgeable recommendations to the
merger and acquisition clients.

Task Exemplify latest successful merger or acquisition.

6.5.1 advantages of mergers and acquisitions

Merger refers to the process of combination of two companies, whereby a new company is formed.
An acquisition refers to the process whereby a company simply purchases another company. In
this case there is no new company being formed. Benefits of mergers and acquisitions are quite
a handful.
1. Mergers and acquisitions generally succeed in generating cost efficiency through the
implementation of economies of scale. It may also lead to tax gains and can even lead to a
revenue enhancement through market share gain.
2. The principal benefits from mergers and acquisitions can be listed as increased value
generation, increase in cost efficiency and increase in market share.
3. Mergers and acquisitions often lead to an increased value generation for the company.
It is expected that the shareholder value of a firm after mergers or acquisitions would be
greater than the sum of the shareholder values of the parent companies.
4. An increase in cost efficiency is effected through the procedure of mergers and acquisitions.
This is because mergers and acquisitions lead to economies of scale. This in turn promotes
cost efficiency. As the parent firms amalgamate to form a bigger new firm the scale of
operations of the new firm increases. As output production rises there are chances that the
cost per unit of production will come down.
5. An increase in market share is one of the plausible benefits of mergers and acquisitions.
In case a financially strong company acquires a relatively distressed one, the resultant
organization can experience a substantial increase in market share. The new firm is
usually more cost-efficient and competitive as compared to its financially weak parent
organization.

110 lovely Professional university