Mergers, Acquisitions, JVs and Strategic Alliances

Published by admin on March 16th, 2009 | Tagged Billionaires, Management, Strategic Management

Brief Article on Mergers, Takeovers, JVs and Strategic Alliances

Merger Strategy

A merger takes place two or more companies join together to form a single company.

Types of Mergers:

Horizontal Mergers: The combining companies are of the same business.

Vertical Mergers: The joining companies are at different stages of the production process of the same product.

Concentric Mergers: The Joining companies are from similar businesses. They however, have no buyer seller relationship.

Conglomerate Mergers: In Conglomerate Mergers the combining companies are from unrelated or completely different businesses.

Reverse Merger: When profit making company merges with the financially weaker company.

Takeover Strategy

Takeovers or Acquisitions happen when one company acquires ownership or the controlling stake in the other company.

Companies looking for rapid growth opportunities often adopt the takeover strategy.

Takeovers may be of two kinds, hostile and friendly.

Hostile takeovers, as the name suggests, are against the wishes acquired company. Friendly takeovers involve negotiation and mutual consent.

Joint Venture Strategy

In Joint Ventures or JVs two or more companies come together and form a new entity to pursue some business activity.

It may be uneconomical for a company to pursue a business activity all alone. This is why it may go in for a JV.

In a JV, the two companies can combine their capabilities and strengths and share the business risks. This way they can overcome all difficulties and hurdles effectively.

Strategic Alliance Strategy

Strategic Alliance: The companies collaborate with each other to pursue a business activity. In a Strategic Alliance new company is not formed.

The companies remain independent after the formation of the alliance.

Strategic Alliances can help companies in many ways such as to get access to foreign technology and to enter new markets.