Financial Management: Acquisition and Merger Analysis Across Nations

This report delves into the realm of international financial management, specifically examining acquisitions and mergers (M&A) across the UK, USA, Germany, and Japan. It begins with an introduction to international finance and the significance of M&A in fostering growth and development. Task 1 provides a detailed overview of different types of mergers, including congeneric, horizontal, vertical, and conglomerate mergers, highlighting their characteristics and applications. The report then analyzes the success of M&A in the aforementioned countries, comparing their approaches and outcomes. It further explores international harmonization possibilities in M&A, discussing factors like cross-culture trades, capital, and organizational structure, emphasizing how harmonization aids in building mutual trust and facilitating efficient business operations. The report concludes by summarizing the key findings and emphasizing the importance of M&A in a competitive global environment, where companies leverage acquisitions and mergers to achieve economies of scale and price differentiation.

International Financial
Management

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK ..............................................................................................................................................1
Acquisition and Merger..........................................................................................................1
Success of Merger and acquisition.........................................................................................3
Comparison.............................................................................................................................3
International harmonisation possibilities which arise in the area of merger and acquisition.4
Organisation structure and employee.....................................................................................6
Taxation..................................................................................................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................6

INTRODUCTION
International finance which is also called as international macroeconomics is defined as
the part of financial economic which makes dealing with various monetary functions that arise
among two or more countries. It consists of topic which involves exchange rate of currency and
foreign direct investment. The main aim of international financial management is to increase
wealth of shareholder (Holburn and Vanden Bergh, 2014). This report is based on the topic of
management of international finance, where success of acquisitions and mergers of four
different countries like UK, USA, Germany and Japan will be discussed. There will also be a
analysis of possibilities in regards with international harmonisation which will occur in the area
of acquisition and merger.
TASK
Acquisition and Merger
In today's world acquisition and merger are termed as the main element for the growth as
well as development of country and nation. The countries like USA and UK are said as inventors
of acquisition and merger as there are various organisations who are thinking to get merge so as
to receive synergy in an organisation. It is analysed that company will make smooth and
effective operations with the assistance of mergers. However, it is required in a company when
they are planning to make diversification in a business. Generally there are two types of mergers,
which can be defined as follows:
 Congeneric Merger: It is a kind of merger where two of the organisations are operating
in related or similar industry but do not make offering of same types of product. In this
companies will make use of same channel of distribution, giving synergy for merger.
Through this merger system, organization would ready to deliver more items and this will
causes the organization to decrease the cost of the item and that is the reason,
organization could ready to get the supportable development (Shi, Sun and Prescott,
2012). Under this merger method, associations are associated with the technology,market
and assembling forms. Under this method, there are two sections which have been
utilized inside the business. These two sections can be defined as Horizontal and Vertical
merger.
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◦ Horizontal Merger: It is a kind of merger which is utilized by an enterprise who are
having similar kind of segment in a market. In other words, it can be said that they are
competitors in market. They are the type of organisation who make production of
similar products in a market (Phillips and Zhdanov, 2013).
◦ Vertical Merger: These are those type of mergers which are used among organisations
and customer or with company's suppliers. They are further classified as,
▪ Market extension merger: In this merger, there are two organisations who offer
same product but the market in which they offer are different.
▪ Product extension merger: This is a type of merger, which is used when two
enterprise are from same industry but make production of distinct but related
product in same area of market.
 Conglomerate Merger: This is the method where two organizations from various
industry blended. What's more, this happen when they needs to differentiate their trade
into new market segment. Conglomerate mergers can't avoid being mergers of two
business organisation involved with various business works out. These consolidation
firms are not contenders of each other (Gugler, Mueller and Weichselbaumer, 2012).
They are not buyer and merchant uniting as in vertical mergers. For all intents and
purposes, the associations in aggregate merger do not have covering segments, however
eventually there is as point of view that they see as basic which has been used to draw
them together. They may see cover in developments, fabricating, advancing, cash related
organization, inventive work or some other factor which made them think they will be
strong match for each other.
Presently, the different characteristics of national corporate administration systems has
changed that is the reason the Merger and Acquisition development has extended completely. In
various countries, bank-firm associations and cross-shareholding blueprints have crumbled, and
legal changes additionally empowered mergers and acquisition. Notwithstanding, creating
number of unconstrained unfriendly takeover exercises occurred in Japan and Germany with
extensive run of the mill importance. The disagreeable takeover of Mannesmann by Vodafone
addresses a watershed modification toward for creating worldwide market for corporate control.
In Japan, particularly, this improvement in M&A is new and raises various kind of issues about
the results and causes for Japanese economy (Holburn and Vanden Bergh, 2014). It ought to be
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conceivable inside a comparable nature of associations, two particular nature associations. More
store is required for this system since two affiliations now keeping up their business. So they
both need to consider about each and every one interest.
Success of Merger and acquisition
In the event that an organization need to upgrade its quality over the globe with the
assistance of M&A procedure, the chief component is to address on the motivation intends to
focus on the plan alludes to the decision of securing mode, the outside association made accepted
by the objective. Cross-fringe confronts in created countries confront two different testing wards:
common law and customary law system. In common law countries, whose fundamental
wellspring of law are composed codes, littler firms frequently association. Little firms are
regularly actualize constrained obligation association. While a large portion of the enormous
undertakings typically take the as offer association. The key refinement among them are
identified with the proprietorship structure.
Comparison
USA JAPAN UK GERMANY
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S
ource 1: Types of merger, 2017

The accomplishment
of M&A in USA is to
receive the efficiency
of scale keeping in
mind the end goal to
pick up the ideal
generation. The USA
fundamental point is to
gives a sound rivalry
in a market. This is
likewise need to
improve their business
in a way.
M&A are being
utilized for expanding
operations of business
so that an organisation
could make operation
in effective manner.
With the support of
merger and
acquisition, many
organisation get
merged so as to
decrease production
cost.
M&A is the significant
tool which is being
used to achieve natural
process between the
organisation. In UK,
M&A is very popular
as it give many
benefits like
expanding of activities
of business, economies
of scale, synergy etc.
In Germany M&A
attracts outer
enterprise because of
various factors.
Germany is having
sound economy and is
having educated force
of work which attracts
many investors from
outside for making
deals of M&A.
International harmonisation possibilities which arise in the area of merger and acquisition
Harmonization is the ethical method for operating in functions to the business. The route
toward systematizing laws, bearings and practices to energize the augmentation, respectability
and capability of battling in a globalized economy as in joined cash related market, overall
accounting standard, mixed trading practices and sharing of development for information
dispersal. Harmonization help with making the sensible business exercises which helps in getting
the each other's certainty while doing procurement and solidification. Many firms need to get
sensible route in this methodology since it propel the goodwill of an affiliation. While
broadening the business at the overall level, a general market have unmistakable accounting
standard. This leads in making vast number of issues which limits many firms in effective way of
working. This is an essential issue while coordinating business wherever scale (International
harmonization. 2017).
 Cross culture: This trades are another basic strong supporter of the improvement in
M&A. This point of view is investigated by dividing deals in three gatherings: family,
outside target and remote acquirer. The three of the European economies have
extensively bigger measures of all inclusive M&A activity than US or, then again Japan.
In UK and the Germany, cross culture trades address around 40-half of plans appeared
differently in relation to 20-25% in US (Countries and regions, 2017). Cross culture
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deals in UK and the Germany are, all things considered, inside Europe, and demonstrate
criticality of the typical European market and starting of different new markets in Eastern
Europe as a implementer of M&A in such nations. The change of single market in Europe
and the introduction of Euro in the mid 90s set uncommon weight on privately arranged
European associations to decrease plenitude restrain and use M&A as an approach to join
to face commonplace competition. The Euro has discarded all cash risks inside the
Eurozone and made a the majority of the fluid capital market of Europe giving new
beginning of financing (Cooper and Finkelstein, 2014).
The level of incentive arrangement in regards with outside targets, household bargains
and outside acquirers. Such kind of information support the wide importance of the bargains of
cross fringe in Europe than in Japan or the USA. The promise or commitment of settings of cross
border for the growth of M&A- while approx 805 of the arise of incentive of merger and
acquisition in UK and the Germany was due to the development of cross culture deals, of around
growth of 20% in Japan and the US was global (UK cross-border M&A activity, 2017). The
global market of UK is mostly ready for both as far as distant takeovers and acquisition of the
outside reference. While exchange of cross fringe assist in clearing the increase of M&A in
Germany and UK, the enlargement of M&A in Japan is done to a great extent due to colossal
increase in amount of local settings.
 Capital: Full scale monetary components have expected a section in the improvement
in M&A, particularly in the Europe and US. Two methods are used for an increasing
organisation to pay in regards with acquisitions are cash and offers. Firms may use
cash if their offers are thought little of, however make use of esteem. In the event that
their stock is hyperboloid. The rates of course of action motivating force in regards to
being cash, offers just or mixed financing using cash, offers or possibly commitment.
In all countries, cash just courses of action speak to about half or a more prominent
measure of all game plan regard (Changqi and Ningling, 2010). These are the
instruments or exercises which are expected to believe while applying down to earth
application.
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Organisation structure and employee
With the assistance of M&A, structure of an enterprise can adopt change as it will expand
the company. Hence, it will also support in framing employees as well as organisation structure
of the entities which are merged, which will also increase the capabilities of employees.
Taxation
In the M&A, merged companies which are making loss can carry forward their loss to the
upcoming years and the merging businesses can make use of merged firm's loss from its net
profits.
CONCLUSION
From the above mentioned report, it has been analysed that in an nation which is having
wide range of competition, many of the organisations are making use of acquisition and merger
exercise so as to gain the synergy. With the assistance of synergy, organisation will be able to
gain wide scale of economies and because of it, they will be able to achieve differentiation of
price among competitors so that organisation will be liable to achieve objectives and goals. US,
UK, Japan and Germany are such countries which are very popular for opting various M&A
activities and these exercise make their appearance in such countries.
REFERENCES
Books and Journals
Changqi, W and Ningling, X., 2010. Determinants of cross-border merger & acquisition
performance of Chinese enterprises. Procedia-Social and Behavioral Sciences. 2(5).
pp.6896-6905.
Cooper, C.L and Finkelstein, S. eds., 2014. Advances in mergers and acquisitions. Emerald
Group Publishing.
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Holburn, G.L and Vanden Bergh, R.G., 2014. Integrated market and nonmarket strategies:
Political campaign contributions around merger and acquisition events in the energy
sector. Strategic Management Journal. 35(3). pp.450-460.
Gugler, K., Mueller, D.C and Weichselbaumer, M., 2012. The determinants of merger waves: An
international perspective. International Journal of Industrial Organization. 30(1). pp.1-
15.
Phillips, G.M and Zhdanov, A., 2013. R&D and the Incentives from Merger and Acquisition
Activity. Review of Financial Studies. 26(1). pp.34-78.
Shi, W., Sun, J and Prescott, J.E., 2012. A temporal perspective of merger and acquisition and
strategic alliance initiatives: Review and future direction. Journal of Management.
38(1). pp.164-209.
Online
International harmonization. 2017. [Online]. Available
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[Accessed on 5th August 2017
Strategic Management: Journal Of Finance. 2017. [Online]. Available
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finance>. [Accessed on 5th August 2017].
Countries and regions. 2017. [Online]. Available through:<http://ec.europa.eu/trade/policy/countries-and-
regions/countries/united-states/index_en.htm>. [Accessed on 5th August, 2017].
UK cross-border M&A activity, 2017. [Online]. Available through:<http://www.minerva-trust.com/news/cross-
border-m-a-activity/>. [Accessed on 5th August 2017].
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