1. MARGERS AND ACQUISITIONS

2. Internal growth comes about when a company invests in products it has developed, while external growth occurs when a company buys the existing assets of another company through a merger. There are three common ways of joining two or more companies. 1. Merger 2.Consolidation 3. Holding Company

3. The Combination of two or more companies into one, where only the acquiring company retains its identity. Typically the larger of the two companies is the acquiring company whose identity is maintained.

4. There are several reasons why a company would prefer external growth through merger. 1-The Company may want diversification to reduce the risks involved with a seasonal business. 2-A merger may permit one firm to obtain something it lacks, such as superior management, talent or a research capability. 3-A company may improve its ability to raise funds when it combines with another having liquid assets and low debt.

5. 4- Merger can result in a good return on the investment when the market value of the acquired company is significantly below its replacement cost.

6. 1- A merger must be approved by votes of the stockholders of each firm. Typically, two-thirds (or even more) of the share votes are required for approval. Obtaining the necessary votes can be time-consuming and difficult. 2- Merger also may be creating a conflict of objective between different businesses, meaning decisions are more difficult to make and causing disruption in running of the business 3- It also results dissatisfaction among current staffs as positions will be limited and the management have to decide which staffs to hold the position after the transaction has taken place.

7. There are many types of mergers and acquisitions that redefine the business world with new strategic groups. From the business structure perspective, some of the most common and significant types of mergers and acquisitions are listed below: 1 - Horizontal Merger 2 - Vertical Merger 3 - Co-Generic Merger 4- Corporate Merger

8. This kind of merger exists between two companies who compete in the same industry segment. The two companies combine their operations and gains strength in terms of improved performance, increased capital, and enhanced profits.

9. Vertical merger is a kind in which two or more companies in the same industry but in different fields combine together in business. In this form, the companies in merger decide to combine all the operations and productions under one shelter. It is like encompassing all the requirements and products of a single industry segment.

10. Co-generic merger is a kind in which two or more companies in association are some way or the other related to the production processes, business markets, or basic required technologies. It includes the extension of the product line or acquiring components that are all the way required in the daily operations. This kind offers great opportunities to businesses as it opens a hue gateway to diversify around a common set of resources and strategic requirements

11. Corporate merger is a kind of project in which two or more companies belonging to different industrial sectors combine their operations. All the merged companies are no way related to their kind of business and product line rather their operations overlap that of each other. This is just a merger of businesses from different verticals under one flagship enterprise or firm.

12. When two or more companies are combined to form a new company. None of the consolidation firms legally survive. In effect, the consolidation firms are dissolved and a new company is formed.

13. A holding company is one whose sole purpose is to own the stock of other companies. To obtain voting control of a business, the holding company may make a direct market purchase or tender offer. A company may elect to become a holding company if its basic business is declining and it decides to liquidate its assets and use the funds to invest in growth companies. Since the operating companies owned by the holding company are separate legal entities, the obligations of one are cut off from the others.

14. • Risk protection, in that the failure of one company does not cause the failure of another or of the holding company. If the owned company fails, the loss of the holding company is restricted to its investment in it. • Ability to obtain a significant amount of assets with a small investment. The holding company can control more assets than it could acquire through a merger.

15. Ease of obtaining control of another company; all that is needed is to purchase enough stock in the marketplace. Unlike a merger which requires stockholder or management approval, no approval is needed for a holding company.

16. Every merger has its own unique reasons why the combining of two companies is a good business decision. The underlying principle behind mergers and acquisitions ( M & A ) is simple: 2 + 2 = 5. The value of Company A is $ 2 billion and the value of Company B is $ 2 billion, but when we merge the two companies together, we have a total value of $ 5 billion. The joining or merging of the two companies creates additional value which we call "synergy” value.

17. We have three forms of Synergy value 1. Revenues: By combining the two companies, we will realize higher revenues then if the two companies operate separately. 2. Expenses: By combining the two companies, we will realize lower expenses then if the two companies operate separately. 3. Cost of Capital: By combining the two companies, we will experience a lower overall cost of capital.