Diversification, Mergers and A cquisitions
1. Introduction
Diversification, mergers or acquisitions since the 1980s, and even more in the late nineties, has become a growing trend for companies, both large and small, domestic and foreign, to form strategic alliances within their particular industries. There are many specific goals that companies may be looking to achieve by doing this, but the main underlying reason is to guarantee the long-term sustained achievement of “fast profitable growth” for their business. They have to keep up with a rapidly increasing diversified global market and increased competition. Nowadays, with the struggle for competitive advantage becoming stronger and stronger, it is almost essential to form alliances. Diversifying and expanding techniques such as mergers and acquisitions are very popular methods for forming these alliances. Basically stated, A merger is the combining of two or more companies into a single corporation. This is achieved when one company or business purchases the property or some other form of assets from another company. The result of this action is the formation of one corporate structure. This new corporate structure retains its original identity. An acquisition is a little different from a merger in that it involves many problems being “dissolved”, and an entirely new company being
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