The following will review some of the different kinds of financial transactions that occur when companies engage in mergers and acquisitions activity. After the merger, the acquired company ceases to exist and becomes part of the acquiring company. For example, in a merger deal occurred between Digital Computers and Compaq whereby Compaq absorbed Digital Computers. In a simple acquisitionthe acquiring company obtains the majority stake in the acquired firm, which does not change its name or legal structure.
Aug 13th, By Michael Bittner Category: Corporate War Chests and Cheap Credit — Industrial and commercial companies have been largely silent the past few years when it comes to deal-making, but they have been aggressively cutting internal costs, allowing profits to grow even as sales have contracted in many markets or grown only slightly.
This has led to the accumulation of substantial war chests at some companies. Because long-terms interest rates are hovering near year lows, this money needs to find a home, and bargains abound in many sectors.
Shrinking Sales — Although the U. With Chinese demand severely curtailed, global commodities are trading at their lowest prices in years, Impact of mergers acquisitions and internal overall exports to China have also slowed.
Unable to expand their sales organically, many companies are looking at acquisitions as a means to grow their top line. In distressed industries such as mining and oil and gas, spin-offs and divestitures are gaining momentum as companies try to shed their least profitable assets.
High Dollar — The strength of the U.
Acquisitions are being used this year to drive both revenue growth and geographic expansion. Tax Advantages — Because many countries have lower corporate income tax rates than the United States, companies outside of the U.
Also, corporate inversions, where an American company buys a foreign-held company and then moves its headquarters to a country outside of the United States can sometimes reduce annual corporate income tax rates from the U. This provides an immediate financial return for the relocated company and also makes future deals for U.
These tax advantages have had a large impact on deal-making in the pharmaceutical sector, for example. Activist Investors — Activist investors continue to flex their muscles in Some companies, racing to get ahead of this trend, are shedding non-core assets rather than risk a protracted activist fight.
The influence of the activists has resulted in a number of sales, company splits, and new company spin-offs.
Fear of Being Left Behind — Sectors including health care and pharmaceuticals, vehicle components, semi-conductors, insurance, and telecommunications are experiencing a boom in deal making. Companies without a merger partner seem to be throwing caution to the wind in some cases, snapping up competitors to prevent being left behind.
EHS Consequences Whether EHS leaders work for an acquiring, acquired, or divested business, company transitions are always chaotic events. People, programs, procedures, and IT systems that workers formerly understood and relied on may suddenly cease to exist, forcing them to forge new relationships and adopt new programs and procedures — or suffer the consequences.
Even worse, the EHS vision, strategy, and approach deployed by the acquiring and acquired companies might be light years apart. Surveys consistently note that cultural alignment is one of the biggest post-merger challenges faced by EHS leaders.
Failing to understand and overcome the cultural differences separating two companies can have disastrous consequences for EHS — increased frequency and severity of health and safety incidents or environmental releases, larger and more frequent enforcement actions, and even fatalities.
The merger frenzy that is occurring this year will require an increasing number of companies to identify and overcome cultural barriers or risk the future success of their EHS programs. Even when cultures align, a lot of work still needs to be done to meld two companies into one.
Who will be in charge of individual programs and the overall organization? How will EHS data be migrated from the old company to the new one? Consider the experience of a mid-size company that purchased a petroleum export terminal in another country. The acquirer believed that the transfer process would be a simple matter of changing the company names in the existing documents and submitting them to the regulatory agency for approval.
In fact the task was much more complicated. In other cases, companies have conducted only preliminary screening for material EHS liabilities or have delayed their environmental due diligence until after closing.
Some companies that forgo environmental due diligence may be responding to the accelerated pace of deal-making, for example in the healthcare sector, where the period between announcement and closing can be as short as one week.
Other companies may have assumed that EHS liabilities can never be material to a deal in their industry. Lacking detailed plans for Day 1, Dayand Day 1k, many EHS integrations are directionless, inefficient, and ineffective.
EHS leaders must ensure that they acquire sufficient baseline information on their acquisitions to fully understand material liabilities, compliance deficiencies, and required capital investments.
Conclusion Deal-making activity thus far in is proceeding at a potentially record-setting pace, meaning that ever more companies will be drawn into unanticipated company transitions. Whether their companies are involved in an acquisition, divestiture, or spin-off, EHS leaders must ensure their programs continue to deliver strong results.
To accomplish this, EHS leaders must start with an understanding of the baseline conditions and EHS cultures of the parties involved in every transaction.
With this knowledge, integration plans that address legacy issues, current performance, and future aspirations can be implemented at the new company.
Michael leads a team of consultants that provides clients and legal counsel with the strategic advice, technical assistance, and temporary staffing needed to overcome the EHS challenges associated with mergers, acquisitions, divestitures, and spin-offs.Nov 11, · Data privacy, cybersecurity, and data breach risks are important due diligence issues in mergers and acquisitions.
Post-acquisition discovery of . The broad objective of this paper is to evaluate the impact of mergers and acquisitions on corporate performance, using the five dimensions of financial performance, learning and growth, customer satisfaction, internal business process and environment.
Mergers and acquisitions in the new era of Companies Act, 3 The Companies Act, had almost reached its retirement age after having been in existence for more than five-and-a-. The Management of People in Mergers and Acquisitions [Theresa A.
Daniel, Gary Metcalf] on ashio-midori.com *FREE* shipping on qualifying offers. Financials alone don't make an M&A deal work.
Equally important is what's behind them--an organization's people. How to understand this reality and benefit from it is the thrust of this unusually comprehensive. Impact of Mergers, Acquisitions and Internal Growth on Organisations Words | 13 Pages.
In this report I will be examining Mergers and Acquisitions, Internal Growth and the impact they have on organisations.
The impact of mergers and acquisitions on organizations has seen a change in the way mergers were conducted in prior years before.
The internal audit report should contain the audit scope and objectives, main control weaknesses identified, documentation of the target company's internal control system, and a possible remediation plan for compliance with the bidder company's control environment.