Problem:
There are many factors that can influence the success or failure of a merger. Prior to merging with another company, managers should consider operational synergy, economies of scale, financial synergy, company valuation, cash flows, and tax savings. The various steps involved in a merger and the anticipated reactions from the different stakeholders of the merging companies must be critically analyzed. This will help to understand how the merger will proceed and the potential impact on different stakeholders.
- Analyze the financial statements, ratios, and cash flows of the two companies.
- Discuss how the two companies performed risk management.
- Discuss the valuation of the two companies. How did the valuation change after the merger?
- Identify the cost components for the merger.
- Analyze the capital budgeting for the merger.
- Analyze how the companies financed the merger.
- Discuss the new capital structure change after the merger.
- Analyze tax savings from the merger.
- Analyze the dividend policies pre- and post- merger.
- Analyze the stock price movements during and after the merger.
- Analyze the merger process.
- Discuss how the companies communicated the merger information to the different stakeholders.
- Analyze the reactions of the employees and other stakeholders.
Review at least five journals to support your points in 7-10 pages.
Additional Information:
This question is basically belongs to the Finance as well as it explains about merger as well as acquisitions between two or more companies. A 1000 word essay about the merger of AT&T and Bell has been taken as an example to explain it.