Financial Analysis. Lesson 11. Mergers, Acquisitions, and Corporate Restructuring

Financial Analysis. Lesson 11. Mergers, Acquisitions, and Corporate Restructuring

1. Mergers combine two companies to create one unified entity.

2. Acquisitions involve purchasing a company to gain control over it.

3. Corporate restructuring reorganizes a company to improve financial efficiency.

4. Synergy represents value created by combining entities through mergers or acquisitions.

5. Due diligence is a comprehensive review of a company before acquisition.

6. Asset divestiture involves selling assets to streamline operations and generate cash.

7. Leveraged buyout (LBO) uses debt to acquire a company’s majority ownership.

8. Horizontal merger combines companies within the same industry for consolidation.

9. Vertical merger integrates companies from different stages of production.

10. Conglomerate merger merges unrelated businesses for diversification purposes.

11. Hostile takeover occurs when one company acquires another against its will.

12. Friendly takeover involves mutual agreement between companies on acquisition terms.

13. Spin-off creates a new independent entity from a larger company.

14. Tender offer proposes purchasing a company's shares at a set price.

15. Shareholder approval is required for significant mergers and acquisitions.

16. Management buyout (MBO) allows a company’s management to acquire firm ownership.

17. Antitrust laws prevent mergers that may reduce market competition.

18. Break-up fee compensates a target company if a deal falls through.

19. Merger arbitrage profits by speculating on potential merger and acquisition outcomes.

20. Integration planning outlines steps to combine businesses after a merger.

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Technical Examples:

1. Synergy analysis assesses whether a merger would increase combined firm value.

2. Due diligence ensures thorough assessment before proceeding with acquisitions.

3. LBO evaluation considers financial feasibility of purchasing a firm using debt.