Mergers

Unviversity of Agriculture
Faisalabad.(UAF)

Prepared by:
Hamza Iftikhar.
Presented by:
Hamza Iftikhar
2017-AG-2602

M.com 4rd semester

University of Agriculture.
Faisalabad.
 What is Merger..??

“A merger usually involves combining

two companies into
a single larger
company.”
“When two entities are come together to form up a
new entity called merger.”
 Types of Merger
In which a product
1 manufacturer acquiring
Vertical the supplier of input or
merger raw materials.

A type of merger occurred

2
when 2 companies
Horizontal competing in the same line
Merger of business activity

3 A merger between firm that

are involved in totally
Conglomerate unrelated business
Merger activities.
 Types of Merger
A merger between firm
4 that are involved in related
Congeneric business activities but
have no competition Strategic
Merger between them. Merger is for
parent company
5 Parent company merge with
Strategic other company due to
enhance his own position.
Merger

Two companies merge for

6 finance. Target company
Financial ready to meet with parent
Merger company due to finance

Financial
Merger is for
target company
 Role of Investment Banks in
Merger
 Between the merger of two organization
bank work as facilitators.

 Bank playing role as financial intermediate

for merging of two companies.
The Reasons Behind Mergers
Reason # 1
Synergies
Synergy is the concept that the value and performance of
two companies combined will be greater than the sum of
the separate individual parts.
 Reasons
Reason # 2
Growth
A company may not grow rapidly
through internal expansion.
Merger enables satisfactory and
balanced growth of a company.
Reason # 3
Diversification to Reduce Risk
Two or more companies operating in
different lines can diversify their activities
through amalgamation.
Since different companies are already
dealing in their respective lines there will
be less risk in diversification.
 Reasons
Reason # 4
Increase in Value
One of the main reasons of merger is
to increase in value of the merged
company.
Reason # 5
Increase capabilities
The ability or power to do something.
Capability may come from acquiring a unique technology
platform rather than trying to build it.
 The History of Merger
Wave 1:
Activity in the U.S.
• The Turn of the Century.
Duration: 1897-1904
Merger type: Horizontal mergers
Horizontal mergers transformed the U.S. into a nation of
industrial giants, with some monopolies
Wave 2:
• The Roaring Twenties
Duration: 1916-1929
Merger type: Horizontal mergers
Began with World War I and ended with the stock market
crash of 1929
 The History of Merger
Wave 3:
• The Swinging Sixties.
Duration: 1965-1969
Merger type: Conglomerate Merger
Unrelated field Stock market driven.
• An Important Development During the 1970s
Hostile takeovers.
Wave 4:
• Megamergers.
Duration: 1981 – 1990
Merger type: All type of mergers include
Very large firms, often industry leaders, merge.
 The History of Merger
Wave 5:
• Globalization.
Duration: 1992 – 2000
Began after 1991 – 1992 recession Large number of
international mergers Ended with September 11, 2001.
Wave 6:
• Private Equity.
Duration: 2003 – 2008
Big Private companies bought all small level of organization.
All mergers and wave concept is ended with the financial
crisis of 2008.