Question

3. Do you think shareholders from target companies enjoy an average gain when acquired, while acquiring shareholders do not benefit anything? Why? Are there any common flaws in the negotiation for a merger? Can you comment on the value creation process in an acquisition?     

Answer 1

Shareholders from the target companies will always be trying to gain from the required acquisition because this target companies are always trying to get themself acquired at a price which is beneficial for the stakeholders interest and the shareholders of this target companywill always try to maximize the overall rate of return from these acquisitions and they would be focused at getting a quiet at a higher price than normal.

the share holders of the acquiring company are not subjected to that benefit because they are the one who are trying to acquire another company and they will game through synergies, not share price in quicktime, because they are the one who are paying for target company shareholders.

the negotiation of the merger is focused at creation of the value for the company's but the target companies is always looking for maximization of the overall return on its monetary terms whereas the acquiring companies looking to generate a long-term benefit for the stakeholders so there maybe flaws in the the viewpoint of both the target and acquiring company.

In acquisition there is a Synergy benefit, because when two organisations will merge with each other It will lead to expansion of the market share and expansion of the potential of the overall company .