Question

Provide an overview of the merger process. Discuss how targets are identified, how acquiring companies can acquire the shares of a target company(particularly if it is a hostile bid) and how merger transactions can be financed.

Answer 1

Merger process : is the process using which two companies combine together to perform a business.
This combination can be done to overtake another company or to reduced the competition.

Merger process takes place when the stakeholders of both the companies agree and if not, they are paid off. During the process of merger a certain purchase consideration is paid by the company which is overtaking the other company.

The targets are identified by knowing the liabilities owned by such targets and how they can be paid off. This would include hostel bid and shares of targets are acquired.

Merger transactions can be financed using long term debts or equity.
Sometimes mergers can be paid in installments.