The Art of the Deal: Introducing Mergers & Acquisitions: Mergers Happen When Two Companies Pool Their Interests to Become One Company. an Acquisition Is When One Company Takes over Another

By Ojala, Marydee | Online, November-December 2005 | Go to article overview

The Art of the Deal: Introducing Mergers & Acquisitions: Mergers Happen When Two Companies Pool Their Interests to Become One Company. an Acquisition Is When One Company Takes over Another


Ojala, Marydee, Online


IN the business world, mergers and acquisitions are a common occurrence. Some make major headlines. Just think of the AOL-Time Warner deal or the proposed merger of America West and US Airways. Others are of interest to a relatively small group of people. In the case of Sirsi acquiring Dynix, it's librarians.

Mergers happen when two companies pool their interests to become one company. An acquisition is when one company (the acquirer) takes over another (the target). Acquisitions can be friendly, meaning both companies want the acquisition to occur, or unfriendly, hence the phrase "hostile takeover." Consolidations are slightly different from mergers in that the resulting company is a new entity. M&A activity need not involve entire companies. One company may acquire only a division, subsidiary, regional branches, or some other piece of another company.

Many reasons trigger a company's urge to merge. It can involve a need for cash, the desire to expand its customer base, the advantages of the other company's technology, or bragging rights to being the biggest (which, in some peoples' eyes, still equates to being the best). It can be a combination of factors. Sometimes it's essentially a rescue operation, bailing out a company that is otherwise going to fail and go out of business.

Aside from investors wondering what a proposed deal will do to their stock price and customers pondering whether a new corporate owner will increase or decrease their satisfaction with the product or service, entire professions rely on M&A transaction data. Among them, according to Jan Davis Tudor (Super Searchers on Mergers & Acquisitions: The Online Secrets of Top Corporate Researchers and M&A Pros, CyberAge Books, 2001), are investment bankers, business appraisers, lawyers, business brokers, university students, database producers, and independent consultants.

The authors of the next two articles spend much of their professional time doing M&A research. It seemed logical, therefore, to ask these experts to pool their knowledge about specialized M&A databases. Amy Affelt begins by describing the main databases she uses. Janet Hartmann picks up the story from there with some rigorous testing of the files. She documents how dangerous it can be to rely on only one database, since different databases cough up different answers to the same question.

REGULATORY FILINGS

On the surface, there are multitudinous sources of information on M&A activities. Government agencies that regulate the securities industry are a prime source for publicly traded companies. In the U.S., the SEC (Securities and Exchange Commission) requires regulatory filings if a public company is involved. Privately held companies are exempt from filing, making that data much harder to come by. Some relevant filings for M&A research (the full list of all EDGAR filings, not just those pertaining to M&A can be found at www.sec.gov/info/edgar/forms/edgform.pdf) include the following:

* SC 13D: Filed when a person or group of persons acquires more than 5 percent of a public company's voting stock.

* SC 13E-3: Filed when a company goes private, making a class of its voting securities to be no longer registered under the SEC Act of 1934.

* SC 13E-4: Filed when there is a self tender (leveraged buyout) by a company. Amendments are also filed whenever there are events that significantly affect the tender offer or the final outcome of the tender offer.

* SC 13G: Filed when a purchaser of over 5 percent of public company's voting stock intends only passive ownership.

* SC 14D-1: Filed when there is a tender offer to acquire more than 5 percent of a public company's voting stock. Amendments are filed to report changes in the tender offer, to report any events which significantly affect the tender offer, or to report the final outcome of the tender offer. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

The Art of the Deal: Introducing Mergers & Acquisitions: Mergers Happen When Two Companies Pool Their Interests to Become One Company. an Acquisition Is When One Company Takes over Another
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.