Merger and Acquisition (M&A) Funding
Creating Value through Partnership!
Merger and Acquisition could be another way to increase shareholder value for many entrepreneurs. There are a whole Varieties of Mergers and Acquisition available. On the other hand, a merger can be hostile or friendly depending on the approval of its Board of Directors. If one of the company’s boards of directors and the managers of the company are against the merger, it is a hostile merger. If the board of directors of both companies approves the merger, it is a friendly merger.
Varieties of Mergers:
- Varieties of Merger and Acquisition
- Horizontal Merger and Acquisition
- Conglomeration Merger and Acquisition
- Market-extension Merger and Acquisition
- Product-extension Merger and Acquisition
- Congeneric or Concentric Merger and Acquisition
- Consolidation Merger
- Reverse Merger
Vertical Merger and Acquisition:
Both Companies are each other customer or supplier, and often they both were doing business together. Merger and Acquisition will provide the party more competitive advantage and reduce their operational cost. This kind of Merger and Acquisitions are very attractive to many businesses to gain their market share and increase their shareholder value.
Horizontal Merger and Acquisition
Horizontal Merger and Acquisition happen when both companies are in direct competition with each other, and both are offering the similar products and services to the same consumer group. Typically, both are at war to gain more market share. Therefore, one or both may make move to acquire or merge each other to gain more market share, and increase their shareholder value. It may happen by mutual agreement and merge or by acquiring the other competition. This way, they both reduce their marketing and operating costs and become relatively a large corporation. This type of merger is very common.
Conglomeration Merger and Acquisition
Conglomeration Merger and Acquisition happens when two unrelated companies merge or acquire each other. There is no product or market relation in this type of merger. There is no actual cause or reason for this type of merger except "The bigger, the better." These types of mergers involve Companies engaged in an unrelated type of business operations. In other words, the business activities of the acquirer and the target are related neither horizontally nor vertically. Often, it is because they want to diversify their investors' investment, and increase shareholder value.
We fund this kind of mergers and acquisition in a form of preferred stock investment only. We carefully participate in this type of merger and acquisition and try to find the shareholder best value.
Market-extension Merger and Acquisition
Market-extension Merger and Acquisition take place when two companies that deal with the same type of Product but in a different market segment or even in different countries. Purpose of this type of merger and acquisition is to gain larger access to the market and increase the revenue of the company. Often reduces their operating cost as well and increase the customer base.
We carefully participate in this kind of investment in a form of the preferred shareholder. Often we like to take over their current senior debt as well and create a single investment in the company.
Congeneric or Concentric Merger and Acquisition
Co-generic merger is a kind of merger in which two or more companies in the association are some way or the other related to the production processes, business markets, or basic required technologies. It includes the extension of the product line or acquiring components that are all the way required in the daily operations. This kind offers great opportunities to businesses as it opens a huge gateway to diversify around a common set of resources and strategic requirements. Often this kind of merger uses the same marketing and distribution channel. These kinds of mergers represent an outward movement by the acquirer from its current business activities within the overarching industry structure. It increases the shareholders’ value and increases the resources of the company.
I this type of merger both company lose their own identity and form a new corporation. Evolve to create a new identity. This kind merger happens when both companies are struggling to survive and none of these companies do have any marketing strategy or a good market share. Then both merge their assets and resources and form a new company with a new identity.
Company A + Company B = Company C
This type of merger involves an acquisition of a public shell company by a private company. Then the private company becomes the public company and by-pass the lengthy and complex process to be followed in case it is interested in going public. This kind of merger is also known as ‘Back-door Listing’.
By doing so company benefits the following
• Easy access to the capital market
• Increase in the visibility of the company in the corporate world
• Tax benefits on carrying forward losses acquired by the public company.
• Cheaper and easier route to become a public company.
We can finance and assist you in the above merger and acquisition situation. Our Merger and Acquisition Team (MAT) dedicated to providing you the services that you need in the verities of the merger and acquisition scenario. Every transaction is different and unique. Therefore, it is very difficult to place the all transaction under the same umbrella. Please call us for more of your requirements. We do have many companies who also want to merge with other companies. It is better to give us a call and begin the discussion from there.