Question

Identify the suggested potential motivations from a proposed merger or takeover, and discuss whether they are likely to produce a beneficial outcome.

Answer 1

ANSWER DOWN BELOW. FEEL FREE TO ASK ANY DOUBTS. THUMBS UP PLEASE.

An entity can have many potential motivation for Merger or takeover to get the Synergy Benefit -
1.Enhanced Marketing strength.
2.exploit Economics of scale.
3. tax gains.
4.to enhanced market power within the same sector.
5. strategic benefit to make the current offering of products or services more competitive.

Synergy in the context of mergers and acquisition means when two companies combine
1. There combined profit is greater than Individual sum of two companies Profit.
2. There combined cost is less than Individual sum of two companies cost.
In simple words, the whole(merged company) is greater than the sum of the parts (individual companies)

There ways to obtain Synergy are.
1. Revenue
2. Cost
3. Financial.

1. Combined entity revenue is greater than the sum of Individual companies- When due to merger there is revenue enhancement.
2. There combined cost is less than Individual sum of two companies cost.
3. A decrease in Combined financing cost, improvement in working capital and cash management.