Mergers and Acquisitions | Internal Memo

“Business Law Consulting UK”
Internal Memo
To : Fellow Intern
From : Fellow Intern
Re : Interest of intent to be included in the Merger project
Date : 16/12/2019
Mergers and acquisitions play a fundamental role in the business environment. It
entails the process of combing two or more companies into one to achieve
synergy with greater dominance n and stability. Mergers materialize when two
companies join forces, occurring with companies being of the same size and with
sizeable advantage on sales, efficiencies, and strengths.
Acquisition on the other end occurs when a company buys another company and
merges it into its operations. The purchase herein can be friendly or hostile
depending on the ensuring circumstances. More often the result is the same but
differences occur on either type.
The potential benefits of combining forces entail aspects of efficiencies and
capabilities. There is an improved economy of scale; this offers an opportunity
for the acquisition of higher quality services and client base. It enhances market
share, pooling resources together is an essential aspect for larger market share.
There is an increased ability to carry out the distribution of resources, reduced
costs of labor, improved talent base and a larger pool of personnel, enhanced
financial resources which make the new entity to make new investments.
Despite these potential benefits, there exist potential drawbacks. There are large
expense uses in the buying process, higher amounts of legal costs, opportunity
costs emanating from forgoing other deals and the possibility of negative
reaction which can impact the stock price index.
The Competition Act 1998, offers an avenue and framework for the identification
and dealing with restrictive practices for businesses and abuse base on market
dominance. This led to the harmonization of the UK and EU competition policy.
There is a prohibition on companies that distort competition through horizontal
agreements. The Competition Markets Authority has the responsibility of
prosecuting these cases, further, the Act deals with the prohibition on abuse of
dominance such as predatory pricing, supply decline, increased prices and
discriminating on prices for skewed benefits (Townley, 2010).