Question

discuss the nature of a business combination and its various forms? T

Answer 1

Business combination : When a voluntary association of firms is formed to achieve common goals and they come together to enjoy the monopoly advantages, that sort of initiative is called business combination.

These combinations may be formed by a oral or written agreement in between the firms. Some times firms decide to merge themselves into one. the main objective of the business combination is to achive common economic welfare of its members . it could be permanent or temporary.

Different forms of Business combination:

Forms of Business Combination	Association: Business units combine to attain some purposes without surrendering their autonomy	Trade association: Bussiness units engaged in a particular trade , they come together and discuss the matters for the promotion of their business and members interest.
Chambers of Commerce : Voluntary association formed with the object of promoting and protectingt he business and communities. they also undertae thr function of referring disputes arising out of trade activities to arbitration for settlement.
Informal agreement: involves the exchange of promises among the members regarding output,fixation fo prices etc.
Fedrations: Aims at providing benifit to member units under an agreement.	Pools: Members come together to regulate the demand and supply of output, reallocation of output etc
Cartels : A pool having common sales agency is called as cartel. Objective is to eliminate competition.
Consolidations:	Partial consolidation:	Trust: Trusts is a temporary consolidation in which the shareholders of the constituent organizations under a trust agreement transfer a controlling amount of their stock to a board of trustees in exchange for a trusted certificate.These trust certificates show their equitable interests in the income of the combinations.Thus, trustees under the trust manage the affairs of the member concerns in the interests of the real owners, who are entitled to dividends based on trust certificates held by them.
holding Companies: A holding company is a form of business organization that is created to combine industrial units by owning a controlling amount of their share capital. Controlled companies are referred to as subsidiary companies. The subsidiaries are independent and function in their name. But they are effectively managed by the holding company.
Community of interest: A Community of interest may be defined as a form of business organization, in which without any formal central administration, the business policy of several companies is controlled by a group of common stockholders or directors. Thus, the administration of different companies is possible either through managerial integration, administrative integration, or financial integration.
Complete Consolidations: in this the combining units lose their entity. It is defined as a form of business organization which is established by the outright purchase of the properties of the constituent organizations and the merging of such properties into single business units.	Mergers: takes place when; two or more organizations merge, and their operations are absorbed by a news organization.
Acquisitions:   refers to the process of acquiring a company at a price called the acquisition price or acquisition premium. The price is paid in terms of cash or acquiring the company’s shares or both
Amalgamation: Amalgamation is an arrangement where two or more companies consolidate their business to form a new firm or become a subsidiary of any one of the companies.