Corporate Finance Assignment Essay Example | Topics and Well Written Essays - 1500 words

Corporate Finance Assignment - Essay Example Mergers and acquisitions create the potential for strengthening the market as well as technological superiority for developing the overall growth of the company with benefits. The cost of production can also be reduced and operational efficiencies can be improved with an emphasis on enhancement of value of brand bringing more goodwill for an achievement that would be spell bounding and financial feasible as well as it is viable for growth (Pautler, 2003). The ideas of mergers and acquisitions (M&A) create an opportunity that would rekindle the companies involved to assess their financial strengths based on an analysis of their products of their money spinners. Some product lines of offering company might be substituted by the divestment of the business involved in that product lines for betterment of turnover because of the offeree company’s strength in the market. This is with certain product lines that would add value addition to the business of offering company. Alternatively, there are circumstances that other big product lines may be pursued by the offering company that contributes nearly 100% of their turnover. Such product lines are strengthened further by the scheme of mergers and acquisitions with the offerree company. Secondly, the advantage in financial terms for a substantial purchase consideration is on the cards while going ahead with the scheme of mergers and acquisitions. For instance, a company with product lines of industrial products contributing less than 15% of the turnover and 85% of the turnover being contributed by real estate in early 1980s could go ahead with a scheme of merger and acquisitions. Such a company after realizing its full potential with realizations of industrial products divested its stake with the scheme of mergers and acquisitions with their real estate arm of business to derive the full potential from both the product lines for a few years. Later when expansion was on the cards for big boom in real estate