From Concept to Wall Street: A Complete Guide to Entrepreneurship and Venture Capital

Chapter 14. Mergers and Acquisitions (M&A)—Introduction

INTRODUCTION

Many companies undergo corporate restructuring throughout their life spans. Such restructuring may take place as part of an exit, as in the case of an acquisition or merger of the company; the creation of the company, as in the case of a spin-off; the raising of capital for divisions of the company (equity carve-out); or the sale (divestiture) of such divisions.

Mergers and acquisitions, as well as corporate restructuring, are driven by several incentives. From the acquisition side, the first is management's desire to improve the company's profitability and future cash flows, either by streamlining the company's existing activities by acquiring the technologies and skilled labor ...