Financial Management
Subject: FINANCIAL MANAGEMENT Course Code: M. Com Lesson: 1 Author: Dr. Suresh Mittal Vetter: Dr. Sanjay Tiwari
FINANCIAL MANAGEMENT OF BUSINESS EXPANSION, COMBINATION AND ACQUISITION
STRUCTURE
1.0 1.1 1.2 Objectives Introduction Mergers and acquisitions 1.2.1 Types of Mergers 1.2.2 Advantages of merger and acquisition 1.3 1.4 1.5 Legal procedure of merger and acquisition Financial evaluation of a merger/acquisition Financing techniques in merger/Acquisition 1.5.1 Financial problems after merger and acquisition 1.5.2 Capital structure after merger and consolidation 1.6 1.7 1.8 1.9 Regulations of mergers and takeovers in India SEBI Guidelines for Takeovers Summary Keywords
1.10 Self assessment questions 1.11 Suggested readings
1.0 OBJECTIVES
After going through this lesson, the learners will be able to • Know the meaning and advantages of merger and acquisition.
1
• • •
Understand the financial evaluation of a merger and acquisition. Elaborate acquisition. Understand regulations and SEBI guidelines regarding merger and acquisition. the financing techniques of merger and
1.1 INTRODUCTION
Wealth maximisation is the main objective of financial management and growth is essential for increasing the wealth of equity shareholders. The growth can be achieved through expanding its existing markets or entering in new markets. A company can expand/diversify its business internally or externally which can also be known as internal growth and external growth. Internal growth requires that the company increase its operating facilities i.e. marketing, human resources, manufacturing, research, IT etc. which requires huge amount of funds. Besides a huge amount of funds, internal growth also require time. Thus, lack of financial resources or time needed constrains a company’s space of growth. The company can avoid these two problems by acquiring production facilities as well as other resources from outside through mergers and acquisitions.
1.2 MERGERS AND
FINANCIAL MANAGEMENT OF BUSINESS EXPANSION, COMBINATION AND ACQUISITION
STRUCTURE
1.0 1.1 1.2 Objectives Introduction Mergers and acquisitions 1.2.1 Types of Mergers 1.2.2 Advantages of merger and acquisition 1.3 1.4 1.5 Legal procedure of merger and acquisition Financial evaluation of a merger/acquisition Financing techniques in merger/Acquisition 1.5.1 Financial problems after merger and acquisition 1.5.2 Capital structure after merger and consolidation 1.6 1.7 1.8 1.9 Regulations of mergers and takeovers in India SEBI Guidelines for Takeovers Summary Keywords
1.10 Self assessment questions 1.11 Suggested readings
1.0 OBJECTIVES
After going through this lesson, the learners will be able to • Know the meaning and advantages of merger and acquisition.
1
• • •
Understand the financial evaluation of a merger and acquisition. Elaborate acquisition. Understand regulations and SEBI guidelines regarding merger and acquisition. the financing techniques of merger and
1.1 INTRODUCTION
Wealth maximisation is the main objective of financial management and growth is essential for increasing the wealth of equity shareholders. The growth can be achieved through expanding its existing markets or entering in new markets. A company can expand/diversify its business internally or externally which can also be known as internal growth and external growth. Internal growth requires that the company increase its operating facilities i.e. marketing, human resources, manufacturing, research, IT etc. which requires huge amount of funds. Besides a huge amount of funds, internal growth also require time. Thus, lack of financial resources or time needed constrains a company’s space of growth. The company can avoid these two problems by acquiring production facilities as well as other resources from outside through mergers and acquisitions.
1.2 MERGERS AND