Mergers

• What is a merger in business terms?

  A merger is when two businesses combine.
• What does external growth involve for a business?

  External growth involves activities outside the existing business.
• What are the four main methods of external growth?

  • Mergers
  • Takeovers
  • Joint ventures
  • Strategic alliances
• What happens during a merger?

  A new business is formed integrating existing businesses.
• Can a merger involve more than two businesses?

  Yes, it can involve two or more businesses.
• What is the distinction between a merger and a takeover?

  A merger creates a new business; a takeover does not.
• How can a merger lead to a takeover later on?

  A merged company can become an attractive takeover target.
• What is a key motivation for businesses to merge?

  Significant potential for synergy.
• What is a key risk associated with mergers?

  Clashing organizational cultures during integration.
• What are the characteristics of businesses that typically merge?

  • Often of similar size
  • Usually operate in the same industry
  • Aim for synergy
• Are mergers common compared to takeovers?

  No, most external growth transactions are takeovers.