Merger and Aquisition or M&A are societary processes of buy and sell in companies. These processes can be operated by fisical and legal persons.
It’s a mistake to believe that this kind of process is restrict to big companies, which transactions involve large amounts of money, or applicable only in cenaries when a large company aquire a small one.
Small and mid-sized companies also use merger and acquisition as a growth strategy, technology obtainment and market consolidation.
Most common kinds of buyers/investors on companies:
Strategic Investor
Acts in the same segment or a synergic one to which the company intends to acquire.
This investor, usually, searches for an expansion of his business by acquiring the customer portfolio, new products, industrial secrets, thus eliminating a competitor.
Financial Investor
Usually invests in joint-stock companies with open or closed capital, searching for long term profits. Has little or none familiarity with the core business activity, focused solely in the risk x profit for its investment.
What are and how are made this operations?
Merger
In this kind of operation, two or more companies unite and form a new private limited company, usually through exchange of stock options.
Example: Itaú and Unibanco.
Aquisition
In this kind of operation the buyier acquire totally or partially the stock options of another company. The former owners become partners – acting or not - and aren’t the only ones to decide the company’s future.
Example: Microsoft and Linkedin.
Incorporation
One or more companies are absorbed by others. The incorporated company ceases to exist.
Example: Santander and Banco Real.
Rupture
When a company divide itself becoming two or more companies. In this case the company that started the processe still operates in the market or may cease to exist.
Example: Sonyericson and Sony Mobile
Joint Venture
This operation creates a new company but the partners operations are kept individually. The partnership obligations are ruled by a rights and duties contract.
Example: Shell and Cosan criated Raizem.
When and how to do it?
If your company is considering or has been considered to participate on an M&A operation, is mandatory a thorough analysis of the current situation of the companies involved and further evaluation of risk. Also critical is the creation of alternative scenarios in order to allow an throughout risks and benefits analysis that the M&A Will offer the corporation.
Smart Consulting can analyze and withstand security to the transaction. Contact us, we will be pleased to help you.