Corporate Finance Report: Analyzing Mergers and Acquisitions

This report provides a comprehensive analysis of mergers and acquisitions (M&A) within the context of corporate finance. The study explores industry anticipation of M&A activities, identifying potential industry shocks that could spur merger activity. It examines the significance of payment modes for stockholders, detailing which methods retain stockholders in the surviving firm and which receive preferential tax treatment. The report delves into the wealth effects of corporate control activities, identifying winners and losers in takeover contests and explaining premium differences in cash versus stock transactions. It also considers the impact on other security holders and discusses how a CEO might structure a takeover. The report incorporates findings from journal research articles to provide a well-rounded perspective on M&A strategies and their implications, including the impact on bondholders and overall financial performance.

Running head: CORPORATE FINANCE
Corporate Finance
Name of the Student
Name of the University
Authors Note

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Executive summary
The study topic deals with the effective changes related to the merger and acquisitions
technique in different contexts related to the process along with a suitable conclusion at the
end.

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Table of Contents
Introduction....................................................................................................................3
Discussion......................................................................................................................3
Industry anticipation over the merger and acquisition...............................................3
Mode of payments in merger and acquisitions..........................................................5
Choice of exchange medium of merger and acquisitions..........................................5
Corporate control and the investment financing........................................................5
Acquiring the firm characteristics and the exchange process....................................6
Payment forms related to the preferencial tax treatment...........................................7
Wealth effects of corporate control activities............................................................7
Corporate control contest...........................................................................................8
Higher takeover premiums paid in cash transactions than in stock transactions.......9
Other security holders fare in takeovers.....................................................................9
Structuring the stakeholder of the CEO for any targeting firm................................10
Impact on the bondholders.......................................................................................10
Conclusion....................................................................................................................11
References....................................................................................................................12

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Introduction
The study topic discusses with the merger and acquisition concept related to the
industry viewpoint. The report also analyses the payment mood of the company stakeholders
of the target firm who will be responsible for the merger or acquisition of the surviving firm
as a whole. On the other hand the wealth effects of the corporate control activities related to
the process of stockholder as well as the preferencial stakeholders. Lastly the subject topic
have also shared their views related to the aspect of the impact of the company stakeholders
at the time of acquisition or the post-merger effect of the targeted firm along with a suitable
conclusion at the end.
Discussion
Industry anticipation over the merger and acquisition
The merger and acquisition concept over the same industry will be in need of
absorbing resources to meet the essential requirements of the competitive advantage and the
firm probability. Hence the probability of the occurrence of the process related the merger
and acquisition between the firms related to the same industry can effectively change the
process of the business environment for the surviving firms of the market. For example the
increase in the market consideration and the general rent expectation value is considered to be
effective for the company. Hence the customers of the targeted firms due to the reduced
number of competitors may look to experience a whole new level of market supplier related
to the process and thus to provide an impactful opportunity for the targeted firms. Thus the
process will be looking to affect the industry commonality and the process of takeover effect
of the operation of different industries suggest that those firms are normally related to the
poor industry performance. Hence this is the only reason why the big companies are going
towards either merger or acquisition in order to expand the business are to increase the

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customer base. On the other hand It can be also said that the merger and the acquisition value
is not at all related to the overall performance of the poor performing firms. Thus it is seen
from the study that the process is considered in the Asian countries also. Hence it is seen that
the high like hood of the process will be engaged to the merger and acquisition process
activity is very much related to the effective understanding of the markets. Hence the
combine process is considered to be very much effective for the overall market understanding
and leveraging the combined capacities for the sake of mutual benefits and the post-merger
benefits in the contrary. Hence in the crisis period of the aspect the diversification will be
helpful to overcome the industry level congestion. Thus it can be said that the merger and
acquisition process will be having a negative impact on the post-merger operation to the
business. On the other hand another aspect will be related to the process and it can be
considered that the overall impact is going to have a negative impact over the industry (Bena
& Li 2014). Hence an example of such an industry to be considered in this case where there
has been a significant change related to the merger and acquision is in the telecommunication
industry which had witnessed the recent change in the ,merger and acquisition. Hence in such
a case the industry had also witnessed certain factors related to the aspect as a whole. These
are as follows-
Enter of the foreign market players
Since the telecommunication industry is a bigger growth area, hence there are a lot of
chances where many foreign market players look to enter in the market with more investment
and far more new opportunities. However it is not easy to start afresh since the spectrum
limitation and the other related barriers. Hence the mergers and acquisition process to expand
the foreign players have used the merger and acquision to expand the business.

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Inorganic subscriber growth
The telecom sector is competitive in nature. Hence it is difficult to the smaller players
to compete with the big companies. Hence the big players are also related to keep the smaller
players as the market is getting’s saturated.
Rapid change in technology
The telecom Industry have witnessed a rapid change in the technology like the 2G, 3G
and 4G. So the achieve economics of learning firms are going for the merger and acquisition.
Hence the process of acquiring small companies to learn the future perspective. Thus in this
case the telecommunication industry had gone for the merger and acquisitions.
On the other hand the increased global diversification towards the friability of the
cross – border mergers of the merger and acquisition process will be expected to infecting the
bilateral trade between two countries and the currency exchange trade rates. Hence the
authors of this topic have argued that the global diversification is at all an effective area to
determine the economic performance of the companies. Hence the cross border merger are
less vulnerable to the international dynamics. Hence besides the newly available resources
and the customer base as well as to increase the opportunity base in order to learn new
knowledge and to improve the competence. Hence to go with such an advantage it is
expected that the overall cross border merger could be looking to increase the synergy gain as
well as to increase the profitability. On the other hand the overall competitive advantage
while going abroad will be very much effective for the company to success as a whole. Hence
these challenges which could potentially improve the customer perspectives over the
accomplishment of the synergy gain could even look to deteorate the financial performance

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of the company. Hence the lack of organisational gain could show the negative impact over
the changes implemented in this case. Hence an example could be considered of a Russian
company who had highlighted the importance of the cross border merger. Hence lack of skills
of the firms who had been working with the merger and acquisition could look to integrate
certain issues. Thus in thGe study the inter religion skills have been considered which could
look to overshadow the negative impacts of the institutional differences between the targeted
and the bidder countries. Hence at the time of crisis the regional contagion could be impeding
the value of the cross border merger and acquisitions. Apart from this the cross border merger
deals with the operational firms engaged in the cross border merger context over the domestic
deals. On the other hand during the crisis period the company’s performance could hurt the
cross border changes which could hurt the effective changes in order to make the domestic
skills effective (Custodio 2014).
Mode of payments in merger and acquisitions
The payment modes related to the merger and acquisition process is related to different areas.
Those areas include the likes of cash, share exchange, underwritten shares, loan stock,
convertible loan amount, preferred shares and deferred payments. These payment modes have
been described as follows-
Share exchange
It is the most common way to finance any merger or acquisition. If a company wishes
to acquire or merge with other company, it is to be assumed that the company holds plentiful
stock or a solid balance sheet. In the average exchange the company exchange the stock or
share of Sellers Company. This payment method is useful for overvalued stock only. Thus at
the time of price decline the companies face certain issues related to merger and acquisition.
Bonds

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The corporate bonds are simple as well as a quick way to raise cash from the current
shareholders or the general public. Hence the bonds face a blindfold of interest rate. The
investor loans money to get return out of it. One such disadvantage of this process is that
there is no chance of getting the money back until maturity period. Therefore the company is
taking the advantage of interest rate aspect to fund merger and acquisition.
Loan stock
This process is very much costly during the time of merger and acquisition. Thus the
lenders and owners agree to the extended payment period with a reasonable loan making rate.
Even after the interest rate is low, the costs are related to the multination of the money at the
time of merger and acquisition.
Apart from this the loan amount, preference shares and deferred stocks are also
considered as a payment option of cash at the time of merger and acquisition.
Payment forms related to the preferential tax treatment
In order to process the preferential tax treatment the form which is used into this
process is cash . This form is used to the internal revenue service form that is used to report
the sales or the real personal property coming out of the preferential tax rate during the
instalment period. Hence the overall instalment period is used to determine the personal
property valuation of the real estate or broker. Hence the instalments sales can be setting
towards one more payment option and the property disposal at the end of the tax year. Hence
an overdue instalment from the disposal of the property is received at the end of the year.
Hence the instalment process in general is related to the disposition to the same type of the
property like a real estate holder and the broking firm who could look for the change in the
job role. Thus the customers in the ordinary property role will be related to the taxpayers
operation and the firm land occupation. Thus for the situations it can be said that the installed

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method of the process will look to implement the instalment sales process in the sales year.
Hence the related change could subjected to be operative to the change in the later tax years
will be also subjected to the process of the tax payer reporting and the instalment method of
payment. Hence the tax payers are subjected to the issue of the cash related to the sale of the
property. Hence if the subjected change is not subjected to receiving the subsequent tax
brackets then it can be said that the business could look to report the overall comprehensive
changes related to the process (Du & Boateng 2015).
Wealth effects of corporate control activities
The studies have considered that the process is likely to be implementing the
shareholders’ value to the company. Hence the overall process related to the implementations
of the merger and acquisition of the stock planning process. Hence to consider the overall
wealth effect of the target companies to receive to the takeover of bids in the period of 250
days and the statistical importance is provided towards the process by some non-standardized
market model. Hence the stock exchange value is allocated to the extensions process towards
the aspect. On the other hand the study results have shown the effective changes in the long
run to the targeted process examined. Hence the overall results of the study is related to the
impact of the wealth management. Hence it is seen that the shareholders of the target
company could use some significant and cumulative advantage towards the cumulative
average abnormal return value. Hence for this process is very much effective to the benefits
of the merger and acquisition of the target company shareholders. Thus it can be said that the
effective changes related to the wealth management process is very much effective to the
corporate organisations as a whole. Thus the study have considered as the overall merger and
acquisition by analysing 124 cases in UK, the studies have said that in boom period related as
high merger activity era the abnormal returns are much higher compared to that of the low

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returns in trough period. Thus the empirical efforts have been considered to the wealth effects
of the shareholders’ value which are related to the economic performance of the company.
Corporate control contest
The impact of the corporate control plays an effective role towards the monitoring of
the management in order to protect the company shareholders as a whole. Since in the day to
day oversights many difficulties have been involved, hence the incentive is likely to devote
the rate of the profit maximization. Hence the process will not include any kind of operational
efficiency and it will ensure low valuation to the marketable securities. Thus the overall
shareholder gains under the market circumstances will adversely affect the corporate
takeovers to implement the economic gains of on the context. Hence different studies have
found that these type of changes will confirm the evaluation of the stock market exchanges as
well as the evaluation of firms are targeted to the takeover.
Higher takeover premiums paid in cash transactions than in stock transactions
In the main difference between the stock and cash transactions it is seen that for the
cash transactions, the acquiring shareholders have to take some risk towards the expected
synergy gain embedded on the acquision of the premium value which is not going to
materialize. Hence for the stock transactions it can be said that the risk value shared to the
process of the sale of the shares. More preciously it can be said that the synergy gain is
related to the proportion of the change to the combined company acquisition and the overall
sales change. For example it can be said that a buyer company wants to acquire the
competitor seller. Hence the market capitalisation value of the company is nearly $50 million
which is made of $100 per share. The market capitalisation value is approximately $40

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million with the synergy gain is of $1.5 million. Hence at the time of the settlement of deal
could look to utilise the market procurement value of $2.8 million.
Other security holders fare in takeovers.
In the context of the shareholders takeover situations there are many inquisitors in this
context, hence it can be said that the inquisitor’s are offering the securities and the cash to the
suppliers or the security holders to the subject companies. Hence it is seen that mostly half of the
companies will be using this process to the takeover decisions. Thus the total number of
stakeholders remain relatively slow towards the all stock based transactional approaches.
Secondly it can be said that the number of hostile transactions will Involve proxy or consent
solicitation. Hence the basic trends will appear to be useful to this context and the public takeover
companies could develop anti-takeover laws in the process of the transaction felicitations.
On the other hand the technological advancement of communications also permit more
frequent and the useful progress and how the process will be effective to the acquirers, target
customers and the other market participants as a whole. Hence the process is significantly be
effective to the proposed mergers and the acquisitions areas.
Therefore it can be said that all the parts related to the stockholders payment process related
to the merger and acquisition have been very much useful to the process. The security holders,
high cash transactions to pay the premium value at all could be useful to determine the possibilities
related to the merger and acquisition model useful as on company basis.
Structuring the stakeholder of the CEO for any targeting firm
As per different article it is seen that overall 6400 targeted firms it is seen that the
targeted shareholders have received a premium of 36 percent over the pre-announcement of
the share price. Hence the total expected changes are related to the magnitude of creating the
company shareholders. Hence the target firms CEO is the most important person to consider
since they take over the market overall. Hence at the time of making any bid it is important to

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think of the buyers. It is good to note that the CEO’s are very much concerned to structure the
shareholders’ value e and they put preferences on the pricing of the takeovers. Hence the
merger costs are forgone until the planned retirement date. Hence as per the collected data
states that those early effective changes could well affect the post-merger and acquisitions
value. Thus It is also seen that the takeover activity at the retirement stage is likely to imply
over the expected benefits of the targeted CEO who are fuelled to sell the firm early. On the
other hand the shareholders (Howson 2017). Hence the overall exchange value related to the
stakeholders interest before the initialization of the merger activity and it is the channel where
the stakeholders take the preferences out of the context. Thus it is also seen that the
stakeholder who are on the verge of taking retirement but still are going for the merger or the
takeover policies of the companies can be desiring to cash out the illiquid cash values as a
whole. Thus there is no such evidence which are related to this process. Last but not least it
can be said that the CEO often looks to sell their firms more frequently to solve those
problems as a whole.
Impact on the bondholders
It is said that the very risks will have a crucial impact on the bondholder since it will
tend to increase the bondholder risks. Hence the shareholders control which is related to this
process can be useful to meet the yield value of the expected shareholders. Hence due to the
difference in the vulnerability it can be said that the expected changes could be useful
towards the shareholders governance value. Thus it is important to construct a quality
portfolio value based on the shareholder value. Hence the expected change to increase the
annualised returns to 1.5%. Therefore it can be said that structuring the takeover will change
as a bondholder rather than considering the change to the stakeholder overall.