Mergers & Acquisitions (M&A)
Navigating M&A: Simplifying the Corporate Chessboard
Mergers and acquisitions (M&A) encompass diverse financial maneuvers bringing companies and assets together. It’s a broad term that includes mergers, acquisitions, consolidations, tender offers, asset purchases, and management acquisitions.
Types of Mergers & Acquisitions
Here is a list of transactions that fall under the M&A umbrella:
Merger
• Boards of two companies approve a combination, and post-merger, the acquired entity becomes part of the acquiring company. (e.g., Digital Computers merging with Compaq in 2007)
Acquisition
The acquiring company obtains the majority stake without altering the acquired firm's name or structure. (e.g., Manulife Financial's 2004 acquisition of John Hancock Financial)
Consolidation
Creates a new entity, requiring approval from stockholders of both companies. (e.g., Citicorp and Traveler’s Insurance Group forming Citigroup in 1998)
Tender Offer:
One company proposes to buy outstanding stock directly from shareholders, bypassing management. (e.g., Johnson & Johnson's 2008 tender offer for Omrix Biopharmaceuticals)
Acquisition of Assets:
One company acquires another's assets, often seen in bankruptcy proceedings. Approval from the selling company's shareholders is required.
Management Acquisition (MBO):
• Executives purchase a controlling stake, making the company private, often with financial partners. (e.g., Dell Corporation's 2013 acquisition by Michael Dell)
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