POINTS TO REMEMBER
  1. What are the forms of corporate combination?
    1. Based on corporate structure
      • Merger
      • Acquisition
      • Consolidation
    2. Based on financial relationship
      • Horizontal
      • Vertical
      • Conglomerate
    3. Based on technique
      • Friendly take-over
      • Hostile take-over
      • Leveraged buy-out
  2. What are the motivations behind combination?
    • Reaping synergistic advantages
    • Enjoying monopoly power
    • Reaping diversification benefits
    • Increased debt capacity
    • Tax saving
    • Reaping gains from undervalued assets
    • Agency issues
  3. What are the gains from and costs of M&As?
    • Gains in terms of increased profit
    • Cost in terms of paying consideration value in excess of MPS in the target firm
  4. How do you determine the consideration value?
    • The purpose is to raise the post-merger value ...

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