1. Why Merge or Acquision?? for the initiator
Horizontal Mergers:
Competition related : a) lowering competition b) reducing the risk of becoming a target c) gaining bargaining power
Production related:? a) producing advantage b) realizing economies of scale and scope c) securing access to new technologies
Market related: a) entering a new product? b) accessing new market/new customers? c) acquiring brand name/ image
Vertical Mergers:
1) reduce transaction costs
2) gaining control over upstream or downstream resources
3) raising barriers to entry
Conglomerate mergers
1) Diversifying risk
2) Gaining control over complements
3) Increasing management's power/empire building
2. Why Merge or Acquision?
For the company
1) solving financial problems
2) Producing funds for investment
3) initiating company restructuring
For the management
1) Securing exit (Cash-out)
2) Organizing succession
3) Solving disagreements among shareholders
Preservation: value creation by capital investment （投秀才模式）
Symbiosis: coexist for a while and integrate gradually with equal treatment (勢均力敵式婚姻）
Holding： no plan to integrate, except for financial transfers, risk sharing or general management capability ( 包養(yǎng)小三模式）
Absorption: high need for strategic integration (男主外女主內(nèi)式婚姻）
