Merger And Acquisition Essay

INTRODUCTION
One of the important part of corporate restructuring is Mergers and acquisitions (M&As). Mergers and acquisitions involves two companies coming together to form one entity thereby creating more value than when they are of separate entity. Mergers and Acquisitions are said to happen when two or more companies join together and in so doing form a single company to create shareholder value over and above that of the sum of the two companies i.e. when two companies merge together, they are more valuable than two separate companies. This normally happens to companies when they are going through rough times. The stronger companies will act to purchase other companies thereby creating a cost-efficient and more competitive company. The companies will merge together hoping to have an improved market share or to improve their efficiency. Target companies will often agree to be purchased because of these potential profits, when they know they cannot survive when they are alone (Investopedia, 2010).
However, Mergers and

The high growth in new technologies and new communication media especially the internet characterize the globalization wave. Companies find themselves in global competition; because many of the obsolete trade barriers were weakened or all together vanish. Public utilities were privatized in many countries and in so doing, pressures for deregulation in many areas were generated from the global competition having a later result of a traditional trade boundaries and sector that are without a clear outline. The result caused the companies to change due to an increase in pressure. And because of this, companies generally will have to reduce the price of their product and improve their quality, more customer-oriented products. For mergers and acquisition to have a general favorable environment, all of these factors must come together according to Alexander et al.,