Assignment EMS2222

Assignment EMS2222 - Merger is a combination of two...

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Merger is a combination of two companies into one larger company. However, what happens when companies mesh together? In my opinion, everything have its own pros and cons, therefore merger is no exception. In the following essay, I am going to discuss the benefits and difficulties that the merged companies may encounter after the deal has been settled and the issues that need to be taken into account to enable things to work well after a merger has taken place. First of all, merger brings about many benefits. It increases the profit of merged companies. When companies mesh together, it means they will have great strategies to put up their product to market and those strategies will help them increase the profit. Moreover, merger means the new company will have more power. They may have more stock, accumulate more capital, take up more market scale and penetrate into the market more. Merger achieves a synergistic effect which means that the results of a combination are greater than the sum of the parts. For example, greater profit may be devised from combined entity than would occur from each individual company because of increases efficiency and cost savings. A greater probability of synergy exists with a horizontal merger because of the elimination of duplicate facilities. When two companies mesh together, it provides a missed attribute that is a company gains something it lacked. For example, superior management quality or research capability may be obtained. Besides, it aids in the company’s ability to raise funds when it combines with
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This note was uploaded on 07/30/2011 for the course FIN 202 taught by Professor Hung during the Spring '11 term at Keuka.

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Assignment EMS2222 - Merger is a combination of two...

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