FINANCIAL MANAGEMENT

Financial Management



Part 1

A. Identify and explain the objectives, and general principles, of the Panel of Takeovers and Mergers.

Answer

The main reason for mergers and takeover is an advantage of synergies. After all, this is obvious: when the two companies get one, need one accounting department, not two, one advertising department, not two, etc. When two companies get one, the benefits may include:

Reduction of staff (downsizing, rightsizing): as mentioned above, decreases the number of employees of such subsidiary departments such as finance, accounting, marketing, etc. Also unnecessary is one of the guides.

Economies of scale: due to a quantitative increase in procurement, transportation, etc., the new company will save on wholesale terms. You should also not forget about all that is needed for one piece for the company: for example, protection of servers, software for accounting of goods and personnel, etc.

Increase market share: when companies merge, the new company has a greater market share and brand awareness is growing. The advantage is that to win new market share is easier for a large proportion than for small. Also improving the conditions of creditors, as the big companies are more confident.

But it is important to understand that not every merger or acquisition is accompanied by a synergy. It often happens that a new company there is conflicts, as happened with DaimlerChrysler, where the internal statutes of the companies are fundamentally not the same. Unfortunately, unsuccessful mergers and acquisitions do not occur often.

In order for a merger or takeover is successful, the basic principles are:

Choose the organizational form of the transaction.

Ensure strict compliance of the transaction the antimonopoly legislation.

Have the financial resources of the association.

In the event of a merger to quickly resolve the question "who is the boss".

B. Identify and examine the economic reasons for acquisitions and mergers and discuss why the expected economic benefits may not be achieved.

Answer

Some economists argue that mergers and acquisitions - an ordinary phenomenon of market economy and that the rotation of the owners is required to maintain efficiency and prevent stagnation. Another part of the executives believe that mergers and acquisitions "kill" fair competition and does not lead to the development of the national economy as well as destroy the stability and confidence in the future, by diverting resources to defense. The Economic studies of merger look at its importance for competition policies. In the context of a strict enforcement of antitrust laws, Williamson (1968) said that the cost to inherent industries monopolization must be evaluated with the advantages consequential from the mergers. His later contribution has reassessed the original trade-off raised. On one side, considering the Strategic reaction of rivals sets limitations to the augmentation in market power for the merging corporations.

Part 2

One of the principal reasons for the failure of Small and Medium Business Enterprises is inadequate long term financial capital.

Required:

A. Identify the long term funding options available for unquoted Small and Medium Business

Answer

Financing a small business can be from internal and external sources of ...