In today’s unfavorable economic environment, many companies are faced with the acute problem of overcoming the crisis and minimizing its consequences, including through the restructuring of property. Not surprisingly, there has been a boom in mergers and acquisitions in recent years.
What Are the Main Goals of Mergers and Acquisition?
Simply put, mergers and acquisitions describe the transformation of two companies into one. A merger is the emergence of a new company as a result of the aggregation of two equal companies, and an acquisition is a buyout of the acquired company by the absorbing company, as a result of which the absorbed company ceases to exist as the absorber increases.
The main goal of mergers and acquisitions is to increase profits. The main motive behind most M&A deals is the synergy effect. This is complementary cooperation between two or more companies, which is expected to achieve better results and higher profits. Diverse enterprises that are not capable of independently producing products are included in a virtual enterprise as part of a joint project and have a single information structure that can support the life cycle of a product or service.
An insufficiently harmonious restructuring of the company implies the need to create protective mechanisms against hostile takeovers. Protective mechanisms and protective tactics are special measures taken by the company in order to prevent or stop a hostile takeover, including reducing the economic attractiveness of the takeover and increasing the costs of the acquiring company. General tactics are measures of civil, administrative, and criminal liability enshrined in legislation. Special protective tactics are implemented directly by the company at its own discretion and can be preventive.
Which Are the Main Types of Merger and Acquisition?
In modern corporate management, there are many different types of mergers and acquisitions of companies. The main features of the classification should be called the following:
- the nature of the companies’ integration;
- nationality of the merging companies;
- an attitude of companies towards mergers;
- merger/acquisition conditions;
- merging mechanism.
The type of mergers depends on the current market situation, as well as on the strategy of the companies and the resources they have. It should be noted that mergers and acquisitions of companies have their own characteristics in different countries/regions of the world. For example, in contrast to Europe, where there are acquisitions of small and medium-sized companies, small joint-stock companies of related industries, and family firms, in the United States, mergers or acquisitions of large firms occur to a greater extent.
There are several types of mergers and acquisitions:
- Horizontal, in which two identical firms with the same business merge.
- Vertical, in which companies do business in the same industry and have a similar specialization.
- Mixed; as a result of a mixed merger, companies from different industries are merged. Focused on meeting the needs of the consumer market and taking into account the current level of product development. A tool for financing and managing various commercial projects using own and borrowed funds.
The most important security step is protection from database administrators while performing any type of M&A. We all know about the presence of large amounts of confidential information on the black market. Such information is very difficult to steal through the loopholes of application systems (if, of course, they are written correctly). Most hacks are carried out by directly copying information from the database or using unprotected archive copies.