Mergers and Acquisition Transactions

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Introduction Financial management in corporate finance involves the identification of credible sources of funds. Additionally, it includes promoting the value of the shareholders as a responsibility tasked to the managers of financial institutions. According to Reddy, Agrawal, and Nangia (2013), the term closely associates with investment banking involving the performance of financial analysis to determine the needs of the firm and the necessary capital capable of efficiently meeting the identified needs. It is within the responsibility of the managers to identify the investment projects favoring the growth and expansion of the firms. Mergers and acquisition provide the typical example of development projects enabling the unification of companies to share profits and liabilities. Therefore, there is the need to examine the advantages and disadvantages of mergers and acquisition by providing an example of a successful merger. Advantages of Mergers and Acquisitions According to Reddy et al. (2013), economic crisis strains the attaining of maximum market value to companies and financial institutions. With the economic challenges, use of mergers and acquisition provides an efficient solution to avoiding inquiring of massive losses. The strategy presents numerous advantages, especially to smaller firms entering into an acquisition with larger enterprises. A significant advantage is an increase in shareholder value, which reciprocates in long term profits to the businesses and sustainability even during financial constraints. Increased value increases the returns and generates cost-effective innovations of the scale of the economy through sharing of available resources.

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