New Technologies - M&S Assignment
Added on 2021-02-11
9 Pages2308 Words72 Views
Companies may be formed or demolished by mergers and acquisition (M&A) to acquire newtechnologies. The worst is that a devastating agreement would cost millions or even trillions ofdollars in effort and resources. A strategic acquisition, on the other hand, will start a business atthe forefront, maximize its market profits over rivals, and likely allow a large corporation togrow into a new market. The purchasing from Google YouTube may be a perfect example.YouTube also serves a multi-billion-dollar income stream that allows cable TV to decrease.Instagram can also be seen as a case in point for Facebook purchase, which lets Facebook boostits social media superiority.The art of making a successful M&A transaction involves sincere observer, insightful sentimentand attention to detail; it requires more than just a review of the balance sheet and a review of thecontract boxes. Three tips are available to escape some of the pitfalls that are not always obviousbut can destroy technology operations.Make Sure You Are Buying Core Technology TechniquesEBay spent $2.6 billion on Skype in 2005 in order to increase revenues through the provision ofa swift means of exchange to buyers and sellers. If Skype could not work with eBay users, themajority believed that it was why eBay sold Skype four years later. But it's not that easy whenwe know a little that the original acquisition of EBay does not require the possession of Skype'sfundamental technologies. Google even wanted to buy Skype from eBay at the time. But as theyrealize, they had to compromise both with eBay and Niklas Zennstrom, founding father of Skypethat continues to have peer-to-peer network technology, they decided not to go through the deal.Eventually, eBay sold a large stake in Skype to a group of private investors and Microsoftacquired the intellectual property company several years later. If people work on the law onM&As (Mergers and acquisitions), they should spend most of their thorough research on each
transaction in order to ensure that the target company doesn't have any rights to the technologythey purchase. In the meantime, it should be the responsibility of junior partners to read anydocument signed by the target group. In multiple test rooms also lined in banker crates. This maybe a painful process, but it would serve to ensure that fundamental intellectual property is notlimited by statute.Communicate With All Shareholders, Even the Ones with the Least Amount of SharesWhen Yahoo was about to purchase Dialpad Communications, they faced undesirable oppositionfrom an uncertain source, who was a businessman, who withdrew much of his interest in Dialpadseveral years ago, indicating that the firm meant almost nothing to him, suddenly had his ownidea. He offered his stock a better price as the sale was about to end. This made the dealcomplicated.First of all, all fusions and acquisitions are filled with surprises and risks, which prevent andprepare them for the worst. Secondly, the majority acts for their own advantage at the lastminute. You can minimize the impact that anyone can take advantage of by talking toshareholders earlier. In this way, you can buy more time to bargain and allow shareholders toappreciate what they get.Enumeration of traps TRAP: RESTATEMENT OF PREVIOUSLY ISSUED FINANCIALSTATEMENTSThe discovery of possible misstatements in financial statements reported on by a predecessorauditor has historically created challenges for the successor auditor. Firm mergers andacquisitions complicate those challenges.
Situation: Scenario: Predecessor firm P audited the financial statements of XYZ Corp. and issuedan audit report for the year ended Dec. 31, 2009. Successor firm S audits XYZ for the year 2010and expects to issue an audit report on comparative financial statements for the years endingDec. 31, 2009, and Dec. 31, 2010. During the audit of XYZ, S becomes aware of informationthat leads the firm to believe that the financial statements of XYZ issued by P in 2009 requirerevision. The P partners disagree with the need to revise the financial statements and object toany restatement. The merger agreement is silent as to which firm’s professional judgmentgoverns this dilemma. In addition, the merger agreement includes a one-year de-merger period,which has not elapsed and is creating additional pressure during the discussions on how best toresolve this problem.SOLUTIONS company can resign from the engagement if it is not satisfied with the technical resolution tothe potential financial statement revisions. This could be a significant problem, as XYZ is amajor client of P and its loss as a client may lead to a de-merger of the firms. A morecomprehensive and detailed due diligence evaluations and inquiries made before a merger oracquisition may have detected this problem early on and resulted in a simple resolution. Greaterdue diligence is recommended when merging firms have as clients startup companies, shellcompanies, larger companies, companies with liquidity and cash flow problems, and companiesin nontraditional industries and other businesses that could be considered high risk. For example,the due diligence might be extended to review more closely the potential merged firm’s workpapers dealing with going concern or other emphasis of a matter disclosures and the engagementteam’s adherence to AICPA audit guides relating to nontraditional and higher-risk industries, as
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