MSc Professional Accounting - Essay

Running head: MSC PROFESSIONAL ACCOUNTING
MSc Professional Accounting
Name of the Student
Name of the University
Author’s Note

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MSC PROFESSIONAL ACCOUNTING
Table of Contents
Section 1..............................................................................................................................2
Introduction..........................................................................................................................2
Mergers and Acquisition Overview.....................................................................................3
Factors affecting merger and acquisition advisory choice..................................................6
Critical Success Factors for the target company..................................................................8
Project Success Criteria.......................................................................................................9
Critical success factors......................................................................................................12
Critical success factors for projects...................................................................................12
Spotting Winning Mergers’ Critical Characteristics.........................................................13
Conclusion.........................................................................................................................14
References for Section 1....................................................................................................16
Section 2............................................................................................................................19
Reflective Essay.................................................................................................................19
References for Section 2....................................................................................................23

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MSC PROFESSIONAL ACCOUNTING
Section 1
Introduction
As discussed by El-Khatib, Fogel and Jandik (2015), the corporate mergers and
acquisitions have received a lot of publicity in the academic as well as corporate world. In 2005,
Thompson Financial reports were seen to announce a worldwide deal volume of US $ 2.7 trillion
which is an increase of more than 38% from $ 2 trillion in 2004. In compared to this, the value of
the deal increased by 33.3% to USD 1.1 trillion an announced in 2005. Additionally, the Europe
deal volume also went up by 37% to US $ 1.2 trillion and additionally the Asian deal volume
also experienced a surge of 64% to USD to 280 million. Several corporations around the world
considered M&A strategies for realizing the cost synergies as for the increased competition,
product mix, pricing pressures and concentration of the asset.
In the recent times, as the number of M&A transactions keeps on increasing, the advisory
entities of M&A as those opposed to the global investment banking have been benefited from
this trend. The global investment banking and brokerage industry is depicted to generate total
revenue of USD 57.5 billion in 2005 in which USD 19 billion was as a result of M&A activities.
Additionally, it is also not common for the company’s especially small and medium companies
with insufficient expertise to manage thine house M&A activities. It is more common for the
large corporations for establishing the in-house financial and corporate deployment departments
for employing the advisory services and utilizing the valuable content network and efficient use
of client personal close to monitor the transactions (Products 2015).
The main purpose of the study inside discussing the fact that shareholders in “target
company gain more in the short-term and medium-term compared to the shareholders in the

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MSC PROFESSIONAL ACCOUNTINGacquiring company”. This discussion is further supported with various types of assessments
which are associated to the process of conducting is business combination activities.
Additionally, the project’s success criteria are also measured from the merger and acquisition of
advisory firms (Belleflamme, Lambert and Schwienbacher 2014).
Mergers and Acquisition Overview
The topic of merger and activity is gaining increasing importance in the last two decades
with response to more and more merger and activities being increasingly complex in terms of
transactions involved. In a broad sense, M&A activity implies the total number of different
transactions which ranges from a number of purchase and sales activity is concentrated between
the joint ventures, alliances and undertakings for ensuring independence of business. There are
several explanations to this theory which leads to confusion and misunderstanding due to the
strategic alliances. Merger is identified as a combination between two entities for creating a
separate entity. Acquisition is the act of purchasing assets or shares of another company for
achieving managerial influence which may not be or maybe in the mutual agreement (Kansal and
Chandani 2014). The model of M&A has been depicted below as follows

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MSC PROFESSIONAL ACCOUNTING
Figure: Model of Merger and Acquisition
(Source: Yang, Wei and Chiang, 2014)
In general, mergers are commonly denoted as merger by absorption or merger by
establishment. In situation of absorption, the company buys all the stocks from a single or
multiple companies and in case of apps of companies the establishment of merger refers to
merging of two new entities into a single new entity. The merger by absorption can be viewed as
de facto acquisition beside the term consolidation can be also implied for merger by
establishment (Mas-Verdú, Ribeiro-Soriano and Roig-Tierno 2015).

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MSC PROFESSIONAL ACCOUNTINGDuring the acquisition of companies, the buying company may pursue a significant share
of the stocks of a target company. Similarly, there are important forms of acquisition, namely
share acquisition and asset acquisitions. In a share acquisition, the company is depicted to
purchase certain percentage of stocks of the target company for influencing the management.
Whereas, during asset acquisition the company buys all parts of the target company’s assets and
the target sustains as a legal entity. Based on the significance of shares of stocks, the company
acquisitions are further categorized into three types. This includes: “complete take over (100%
of target’s issued shares)”, “majority (50-99%)”, and “minority (less than 50%)” (Yilmaz and
Tanyeri 2016). In addition to this, the merger and acquisition are depicted as to separate from the
actions which have several consequences based on the legal obligations, tax liabilities and
procedure of acquisition. Despite of this, in general the final outcome of M&A transactions
considered in which two or more companies are seen to combine their business affords and we
do not make an effort to separate this merger transaction from acquisition ones. In such a
situation, M&A is treated as a corporate finance service which provides M&A advice to the
firms (Ferris, Houston and Javakhadze 2016).
In context of classification of mergers and acquisitions, the main perspective of value
chain for M&A is categorized as horizontal, vertical or conglomerate. In case of horizontal
M&A, the target companies and the acquiring companies are depicted as competing in the same
industry. In addition to this, in horizontal business combination process the restructuring in
business occurs as a result of technological changes and liberalization. This particular trade is
evident in industries related to petroleum, the mobile and pharmaceuticals (Yılmaz and Tanyeri
2016). A similar example of this can be seen with the merger of two US giants namely Glaxo
and SmithKline Beecham with a total value of USD 76 billion. Based on the statement of the
former CEO of SmithKline Beecham the main aim of combination of two companies was
depicted with research and development synergies to drive the revenues and explore enormous