Mergers and acquisitions have many motivations. There are many motives for mergers and acquisitions. Two companies can join together to increase and develop their wealth. The combination of two companies can create synergies which will help increase the overall value of the resulting merged company (Florio et.al., 2018). A merger that is successful may eliminate certain costs, allow for new technology and increase scale economy. Diversification is often the goal of mergers. Diversification goals and objectives are often the driving force behind mergers, product extension and market expansions within conglomerates. There are also some mergers and purchases motivated by the need to own unique assets. Many mergers and acquisitions are motivated by the ability to access new technology. To evaluate potential purchase options, the most common instruments are discounted cash flow and enterprise value. Under discounted cash flows, the business wishing to buy another firm builds the target firm’s future cash flow by extrapolating the company’s previous cash flow (Thomson & Emery, 2013). To determine the current value of the company, the buyer adds a discount to these cash flows. The enterprise value can also be used to evaluate an acquisition. The total amount of outstanding debt plus part of the current market value for all shares. The sale of a portion of company equity is stock financing, but debt financing involves borrowing money (Wieczorek Kosmala, 2020). Credit unions and banks are some of the sources for debt financing.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
