Merging

A merger is the joining of two or more companies into a new entity. A merger differs from a merger in that none of the companies involved will survive as a legal entity. Instead, an entirely new entity will be created to contain the combined assets and liabilities of the two companies.

Why merge?

A merger is often done when competing companies in a similar business would achieve some synergy or cost savings by combining their operations that can be quantified in a financial model. Conversely, it can also occur when companies want to enter new markets or venture into new businesses and use mergers and acquisitions as a way to achieve synergy. Here is a list of reasons why companies consolidate:

Access to new markets
Access to new technologies
Access to new clients/geographies
Cheaper financing for a larger company
Cost savings (synergies) achieved through bargaining power with suppliers and clients
Elimination of competition

Advantages and disadvantages

A merger is a way to raise cash, eliminate competition, save on taxes, or affect the economics of large operations. A merger can also increase shareholder value, reduce risk through diversification, improve management efficiency, and help achieve company growth and financial profit.

On the other hand, if too much competition is eliminated, a merger can lead to a monopoly, which can be problematic for consumers and the market. It can also lead to a reduction in the new company’s workforce as some jobs are duplicated and therefore some employees become obsolete. It also increases debt: by merging the two companies, the new entity assumes the liabilities of both.

Merger procedure

The terms of the merger are finalized by each company’s board of directors. The plan is prepared and submitted for approval. For example, the Supreme Court of India and the Securities and Exchange Board (SEBI) must approve the shareholders of the new company when the plan is submitted.

The new company officially becomes an entity and issues shares to the shareholders of the transferring company. The transferor company is dissolved and the transferee company takes over all assets and liabilities.

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With over 6 years of experience in the digital marketing landscape, She has honed her expertise in executing high-impact SEO strategies, content optimization, link building, and leveraging data analysis to enhance online visibility and drive substantial revenue growth. As an EX- SEO Analyst at Coinpedia.org with a Bachelors degree in Computer Science and Engineering she excels in tailoring SEO strategies to meet the unique needs of any project, consistently turning challenges into opportunities to maximize outcomes.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

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