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Running head: MERGERS AND ACQUISITIONS
Mergers and Acquisitions
Earl Scialabba
November 3, 2006
Abstract
The paper discusses the impact of mergers and acquisitions on business, comparing both political and natural analogies to these concepts. Both sensible and dubious reasons to make mergers and acquisitions are explored as well as costs and benefits to engaging in them on an international scale. Lastly, the paper explores methods to avoid incompatible business practices when considering merging with or acquiring a foreign company.
Mergers and Acquisitions
Mergers and acquisitions is to the corporate world what international politics is to the literal world. Corporations merge with or takeover their rivals much the same way, and sometimes with the same level of resistance as the merging of East and West Germany or Allied Invasion of France. According to Brealey, Myers, and Marcus, a merger is a “combination of two firms into one, with the acquirer assuming assets and liabilities of the target firm” (2004). The merger must be with the consent of at least half the shareholders of the acquired company, the same way the majority of German voters approved the reunification of Germany mentioned above. An acquisition can be as desired by both sets of shareholders, or it can be more like an invasion, where the acquiring company purchases the common stock or assets of the acquired company (2004). This paper will explore the impact of mergers and acquisitions in the business world, from a domestic and international perspective as well as the attending risks and rewards.
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