Meaning of merger and acquisitions:-

The combining of two companies to form one entity, suggesting a balance of strength and willingness between the two to join forces. This is not necessarily the case. Companies talk of mergers and acquisitions when they really mean takeover, sometimes hostile, but the former term is more sensitive to the feelings of the target company.

Definition:-

Merger

A full joining together of two previously separate corporations. A true merger in the legal sense occurs when both businesses dissolve and fold their assets and liabilities into a newly created third entity. This entails the creation of a new corporation.

example:

deccan airways and kingfisher

jet airways and air sahara

Acquisition

Taking possession of another business. Also called a takeover or buyout.

example:

tata corus, arcelor mittal

Introduction:-

Merger is a tool used by companies for the purpose of expanding their operations often aiming at an increase of their long term profitability. There are 15 different types of actions that a company can take when deciding to move forward using M&A. Usually mergers occur in a consensual (occurring by mutual consent) setting where executives from the target company help those from the purchaser in a due diligence process to ensure that the deal is beneficial to both parties. Acquisitions can also happen through a hostile takeover (argumentative takeover) by purchasing the majority of outstanding shares of a company in the open market against the wishes of the target's board. In the United States, business laws vary from state to state whereby some companies have limited protection against hostile takeovers.

Abstract:-

Corporate mergers and acquisitions (M&As) have become popular from corner to corner the world during the last two decades thanks to globalization, liberalization, technological developments and intensely competitive business environment. The synergistic gains from M&As may result from more efficient management, economies of scale, more profitable use of assets, exploitation of market power, the use of complementary resources, etc. Interestingly, the results of many empirical studies show that M&As fails to create value for the shareholders of acquirers. In this article I covered background of merger and acquisition, reasons for failure of merger and acquisition, and impact of merger on shareholders.

The complex phenomenon that mergers and acquisitions represent has attracted substantial interest from a variety of management disciplines. Three primary streams of enquiry can be identified within the strategic and behavioral literature, which focus on the issues of strategic fit, organizational fit and the acquisition process itself. The recent achievements within each of these research streams are briefly reviewed. However, in parallel to these research advances, the failure rates of mergers and acquisitions have remained consistently high. Possible reasons for this dichotomy are discussed, which in turn highlight the significant opportunities that remain for future M&A research.