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Running Head: MERGING VERSUS ACQUISITION 1

MERGING VERSUS ACQUISITION 2

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Merging Versus Acquisition

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Merging Versus Acquiring for a Business

Mergers and acquisitions are strategies that enable a business to grow especially when faced with financial constraints. Merging requires two separate firms to voluntarily fuse and operate as one new bigger firm while acquisition calls for one company to buy and take over another business entity. Each of the two strategies has advantages and disadvantages and the decision on whichever is picked depends on some other factors such as the circumstances at hand and the needs of the firm. According to Kumar, (2019), merging a company is better than being acquired since a merger is known to be a more friendly corporate restructuring strategy. Specifically, merging a business is voluntary and mutually advantageous to the companies involved. When a business merges with another one, most of its values and functions will still exist in the new entity unlike when it is acquired where its existence ceases as shown at essay help. Additionally, a company does not benefit when it is acquired as it is disbanded and taken over by the bigger company.

Merging a company is better than having it acquired since in merging the two companies have equal power-sharing while in the acquisition, the acquired company becomes powerless or retains an insignificant amount of power (Dierickx, & Henman, 2018). Precisely, merged companies make major operational decisions together as none of them is superior or inferior to the other one. On the other hand, in the acquisition, the acquiring firm makes the major decisions and dictates the terms of operation after acquiring the smaller firm. Generally, the acquired firm is rendered powerless and can hardly participate in decision-making. Although both mergers and acquisitions are helpful strategies for businesses, merging is more beneficial as each of the two firms mutually benefit while in acquisition only one firm benefits, the acquiring firm while the acquired one ceases to exists. Therefore, it is better to merge a firm than to be acquired by another one.

References

Dierickx, C., & Henman, L. (2018). The Merger Mindset: How to Get It Right in the High-Stakes World of Mergers, Acquisitions, and Divestitures. Routledge.

Kumar, B. R. (2019). Mergers and Acquisitions. In Wealth Creation in the World’s Largest Mergers and Acquisitions (pp. 1-15). Springer, Cham.

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