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Corporate Synergy
Corporate synergy refers to a financial benefit that a corporation expects to realize when it merges with or acquires another corporation. Corporate synergy occurs when corporations interact congruently with one another, creating additional value. Synergies are divided into two groups: operational (revenue enhancement and cost reduction) and financial (decrease in cost of capital, tax benefits). Seeking for synergies is a nearly ubiquitous feature and motivation of corporate mergers and acquisitions and is an important negotiating point between the buyer and seller that impacts the final price both parties agree to. The synergy value should not be confused with the control premium; these metrics should be calculated separately. Positive synergies arise when the combined corporation will bring about better results than the two independent corporations, as in the saying "the whole is better than the sum of the parts". If the corporations do not do due diligence, negative synergies ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Synergy
Synergy is an interaction or cooperation giving rise to a whole that is greater than the simple sum of its parts. The term ''synergy'' comes from the Attic Greek word συνεργία ' from ', , meaning "working together". History In Christian theology, synergism is the idea that salvation involves some form of cooperation between divine grace and human freedom. The words ''synergy'' and ''synergetic'' have been used in the field of physiology since at least the middle of the 19th century: SYN'ERGY, ''Synergi'a'', ''Synenergi'a'', (F.) ''Synergie''; from ''συν'', 'with', and ''εργον'', 'work'. A correlation or concourse of action between different organs in health; and, according to some, in disease. :—Dunglison, Roble''Medical Lexicon''Blanchard and Lea, 1853 In 1896, Henri Mazel applied the term "synergy" to social psychology by writing ''La synergie sociale'', in which he argued that Darwinian theory failed to account of "social synergy" or "social love", a co ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Mergers And Acquisitions
Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspect of strategic management, M&A can allow enterprises to grow or downsize, and change the nature of their business or competitive position. Technically, a is a legal consolidation of two business entities into one, whereas an occurs when one entity takes ownership of another entity's share capital, equity interests or assets. A deal may be euphemistically called a ''merger of equals'' if both CEOs agree that joining together is in the best interest of both of their companies. From a legal and financial point of view, both mergers and acquisitions generally result in the consolidation of assets and liabilities under one entity, and the distinction between the two is not always clear. In most countries, mergers and acquisitions must co ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Control Premium
A control premium is an amount that a buyer is sometimes willing to pay over the current market price of a publicly traded company in order to acquire a controlling share in that company. If the market perceives that a public company's profit and cash flow is not being maximized, capital structure is not optimal, or other factors that can be changed are impacting the company's share price, an acquirer may be willing to offer a premium over the price currently established by other market participants. A discount for lack of control, sometimes referred to as a minority discount, reflects the reduction in value from a firm's perceived optimal or intrinsic value when cash flow or other factors prevent optimal value from being reached. Overview of concept Transactions involving small blocks of shares in public companies occur regularly and serve to establish the market price per share of company stock. Acquiring a controlling number of shares sometimes requires offering a premium over t ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Due Diligence
Due diligence is the investigation or exercise of care that a reasonable business or person is normally expected to take before entering into an agreement or contract with another party or an act with a certain standard of care. It can be a legal obligation, but the term will more commonly apply to voluntary investigations. A common example of due diligence in various industries is the process through which a potential acquirer evaluates a target company or its assets for an acquisition. The theory behind due diligence holds that performing this type of investigation contributes significantly to informed decision making by enhancing the amount and quality of information available to decision makers and by ensuring that this information is systematically used to deliberate on the decision at hand and all its costs, benefits, and risks. Etymology The term “due diligence” means "required carefulness" or "reasonable care" in general usage, and has been used in the literal s ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Returns To Scale
In economics, returns to scale describe what happens to long-run returns as the scale of production increases, when all input levels including physical capital usage are variable (able to be set by the firm). The concept of returns to scale arises in the context of a firm's production function. It explains the long-run linkage of the rate of increase in output (production) relative to associated increases in the inputs (factors of production). In the long run, all factors of production are variable and subject to change in response to a given increase in production scale. While economies of scale show the effect of an increased output level on unit costs, returns to scale focus only on the relation between input and output quantities. There are three possible types of returns to scale: increasing returns to scale, constant returns to scale, and diminishing (or decreasing) returns to scale. If output increases by the same proportional change as all inputs change then there are cons ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Bain & Company
Bain & Company is an American management consulting company headquartered in Boston, Massachusetts. The firm provides advice to public, private, and non-profit organizations. One of the Big Three management consultancies, Bain & Company was founded in 1973 by former Group Vice President of Boston Consulting Group Bill Bain and his colleagues, including Patrick F. Graham. In the late 1970s and early 1980s, the firm grew rapidly. Bill Bain later spun off the alternative investment business into Bain Capital in 1984 and appointed Mitt Romney as its first CEO. Bain experienced several setbacks and financial troubles from 1987 to the early 1990s. Romney and Orit Gadiesh are credited with returning the firm to profitability and growth in their sequential roles as the firm's CEO and chairman respectively. In the 2000s, Bain & Company continued to expand and create additional practice areas focused on working with non-profits, technology companies, and others. It developed a substanti ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Private Equity
In the field of finance, the term private equity (PE) refers to investment funds, usually limited partnerships (LP), which buy and restructure financially weak companies that produce goods and provide services. A private-equity fund is both a type of ownership of assets ( financial equity) and is a class of assets (debt securities and equity securities), which function as modes of financial management for operating private companies that are not publicly traded in a stock exchange. Private-equity capital is invested into a target company either by an investment management company (private equity firm), or by a venture capital fund, or by an angel investor; each category of investor has specific financial goals, management preferences, and investment strategies for profiting from their investments. Each category of investor provides working capital to the target company to finance the expansion of the company with the development of new products and services, the restructuring ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Corporate Finance
Corporate finance is the area of finance that deals with the sources of funding, the capital structure of corporations, the actions that managers take to increase the Value investing, value of the firm to the shareholders, and the tools and analysis used to allocate financial resources. The primary goal of corporate finance is to Shareholder value, maximize or increase valuation (finance), shareholder value. Correspondingly, corporate finance comprises two main sub-disciplines. Capital budgeting is concerned with the setting of criteria about which value-adding projects should receive investment funding, and whether to finance that investment with ownership equity, equity or debt capital. Working capital management is the management of the company's monetary funds that deal with the short-term business operations, operating balance of current assets and Current liability, current liabilities; the focus here is on managing cash, inventory, inventories, and short-term borrowing an ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
