Fin 444 Week 5

In: Business and Management

Submitted By knguyen83
Words 1085
Pages 5
Merger And Acquisitions Failure
NGK
University of Phoenix
Fin 444
March 2, 2015

Merger And Acquisitions Failure
Over the decades business have grown and expanded into markets were previous barriers excited. Globalization allowed foreign and domestic companies to reach a wider customer base which lead to increased competition. In an effort to stay competitive companies might increase operational expenses and leverage. Compounding this strategy with economic recession or management inexperience can result in business failure.
Analyzing the reasons such as technical and legal insolvency, and bankruptcy will show why mergers and acquisitions fail. In addition, the question poses as to what happens to the stakeholders, image of the company, price per share, market share, company assets, and position in the industry, and service capability within the industry? Also, once the failure of an M&A occurs, what happens to the assets of both companies? Furthermore, this paper will discuss various forms of corporate restructuring.
Insolvency And Bankruptcy
Companies often merge to gain access into to a new market that would otherwise be difficult to enter. Mismanaged overexpansion policy in conjunction with other ineffective marketing, financial decisions, or operating procedures effect the new company negatively because they most likely have financial obligations carried over from the acquisition. Every negative development affects the company compounded in financial aspects. This condition can lead to technical insolvency and indicates the inability of the company to fulfill their liabilities in due time (Technical Insolvency, 2011). Furthermore, legal insolvency occurs when the business’s debt is greater than total assets (Insolvency, 2008).
Bankruptcy can be defined as the legal filing to acknowledge the firms inability to operate under the given circumstances…...

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