Mergers & Acquisitions Watch

MISS B asked:


I have a debt with washington mutual for $700, that i want to pay off already, but i have this company called RJM Acquisitions sending me collection letters and i can settle for a $420, but i hesitate, because i’d rather pay washington mutual directly. I searched this company and they don’t have a website, they have even offered me gifts. But it didn’t seem professional. I don’t know what to do. Any advice?

JACK

peak-a-boo asked:


my contracts up with alltel and i want to get a new phone but if i get a new contract with alltel then ill have to keep it for 2 years and i want to get a new phone with verizon so im wondering when the merger will start so i can get a new phone from Verizon.

ohh and my parents are under contract with alltel so that why i cant just go to verizon lol

MILDRED

jtlam asked:


Say this morning’s Oracle’s BEA offer, for instance. What financial numbers and trends prompted for this buyout?

HANA

jimmy5454 asked:


At HCA, a leveraged buyout has been anounced at a stock price of $51 as of 07/18 pending shareholder approval. The stock currently is trading at $48. Why would I not buy all the stock I can now at $48. Don’t the shares have to be bought out at $51?

VICENTE

AMC asked:


What happens to the stock owners of a Ch.11 bankrupt company if the company is bought out by another company? I own shares of a company that recently went into Ch.11 bankruptcy, and now I hear rumors of a possible buyout? What would happen to my shares if this happened?

PATRICK

Mark Waltzer asked:


Most businessmen sell a business only once or twice in their lifetime. Selling a business may be the most difficult task for a businessman who might have taken years to build a profitable and reputable business. When he puts it up for sale, he hopes to recover the price for all that he has put into it. Selling a business can be profitable decision or one that can result in the loss of one’s life’s work. It is advisable for businessmen to hire professionals for selling their business. If your business falls into the mid-market category and you aim to drive a strategic deal out of your sale, you will require an expert merger and acquisition advisor. But if your business belongs to the Main Street and you just want to get the best price for it, you might need a business broker. Below, we discuss some of the differences between the two professionals, which can help one decide whom to hire for selling a business.

• Type of Business

Business brokers specialize in what are called main street businesses, which could be in the range of $100,000 to 1,000,000 in revenues and include businesses like restaurants, dry cleaners, gas stations, convenience stores etc. M&A advisors usually take on businesses with larger turnover, like manufacturing units, technology firms, distributors etc. If the business to be sold is amongst main street businesses, the services of a business broker to sell the business would be appropriate, whereas if it is larger, then the services of a merger and acquisition advisor would be needed.

• Targeted Buyer

Business brokers target individual businessmen for selling a business, whereas M&A advisors are connected with corporate buyers, who seek a strategic reason behind a merger or an acquisition.

 

• Business Valuation

Business brokers generally apply “rule of the thumb” valuations for main street businesses to determine their selling price. Such valuations rarely vary. Merger and acquisition advisors are called in when there can be a broad interpretation of strategic value and rules of thumb do not apply. Large businesses generally have high components of niche services, intellectual properties, strong customer base etc, which make the strategic value for the business vary widely.

• Complexity of Transaction

Business brokers handle small businesses to sell and their clients consist of individuals. The process of selling the business is simpler as compared to larger corporations. Contracts for small businesses are straightforward and negotiations are based on the requirements of the seller, price and financing. For a merger and acquisition advisor, the target is a corporate buyer, who is an expert at M&A deals. Corporate buyers have different teams working for them like legal experts, investment bankers, valuation professionals etc. and their contracts are extremely complex. A corporate buyer sends in teams to conduct due diligence and examine the business to sell in detail. Hence if the business to sell is a large corporation, the seller will need a merger and acquisition advisor, who is equipped and experienced to negotiate with such pros.

 

• Volume of Clients

Business brokers represent as many businesses for sale as they can. For business brokers, it is a benefit to have many businesses listed with them when they are contacting individual buyers. Business brokers rely on mass email a campaign, posting on websites etc. and their attention is divided amongst many clients at one point of time. Merger and acquisition advisors, on the other hand, have an exclusive clientele of 3 to 4 clients per professional. With specific industry niches and a customized database of contacts, merger and acquisition advisors give their clients the personal and professional touch that they demand.

• Fees

Business brokers have a system of a minimum upfront fee plus around 10% of the transaction fee on completion of a successful deal. They do not charge monthly fees. Merger and acquisition advisors, on the other hand, charge a substantial upfront fee or a monthly fee in the range of $3000 to $10,000 per month. M&A advisors also charge a percentage of transaction value as fees on completion of the deal, which is decided on basis of the size of the business. Big Wall Street M&A companies are known to refuse transactions below $1 million in fees.

Based on the points made above, you can decide whether to hire a business broker or an M&A advisor for selling your business. The major deciding factor will be the cost that you are willing to incur. Keep in mind that if you have a small business to sell, it will not be able to sustain substantial upfront as well as monthly fees of the merger and acquisition advisor. Hence it would be better to go for a business broker. Go for a merger and acquisition advisor only if you need to sell a large corporation with high intellectual property and niche services.



CHIN

lola Bulregard asked:


does anyone know if they have any buyouts.?

ANNA

Prof.M.S.Rao asked:


“When a piece of a log is subjected to severe pressure becomes charcoal. And if it is subjected to extreme pressure results in a diamond. Entrepreneurs are made from men like that”.

Now days, there is too much talk of Indian companies taking over the companies in abroad. The Tata Steel’s take over of Corus has hit the headlines. It was a very bold initiative by Ratan Tata. There was a talk of paying too much price for the acquisition of Corus by the critics. Over all it has demonstrated and displayed the leadership capabilities of Indian business leaders.

Once upon a time when Lord Swaraj Paul made an attempt to take over an Indian company it was treated a hostile bid. It hit national headlines then. Many global MNCs used to take over Indian companies in the past. During the preliberalisation era foreign companies were on the offensive mode to take over Indian companies. In post liberalization, things have changed for better for the Indian industry. The Indian economy has looked up and is becoming a robust economy. As a result, the Indian industry changed its stance from being defensive to offensive.

In this context, let us briefly define what is ‘merger’ and ‘take over’. Merger refers to the process of two business units becoming one. On the other hand, take over refers to the process of taking over of one unit by a relatively stronger business unit. Both merger and take over has many merits such as

• Competitive edge in the market. There is synergy in this and one plus one is three, six or just more than that. The raw material can be purchased in bulk quantity thereby reducing the cost of production. When the cost of the product or service is reduced, the company has better chances to have more profits as well as it can compete with others by slashing down the prices. In a nut shell, there is ‘economies of scale’ and increased economic efficiency.

• There is increase in market share in the same segment or sector thereby having better brand image and good will for the company.

• Increased benefits to the shareholder value. The benefits so gained are passed on to the shareholders thereby increasing their value.

• There could be tax benefits to the company in few cases.

• Consolidation in the sector wise and it eliminates the unhealthy small time players who are weak and can not survive in the business.

• Many other strategic advantages.

CASE STUDY OF LAXMI NIWAS MITTAL:

There was a hue and cry when Mr. Laxmi Niwas Mittal took over Luxembourg-based Arcelor Steel. Mittal Steel made a daring $ 33 billion offer to take over its rival Arcelor. It was the boldest offer by any NRI to be made. There were lots of practical problems involved in acquisition. The French Govt went to the extent of protecting their company and adopted various techniques to prevent the acquisition.

Mr. Mittal pursued up to the hilt. He allayed the apprehensions of the employees and also that of shareholders of Arcelor and after prolonged battle the company was acquired and the transition has been made smooth. Ultimately he created 100 million tonne steel company. In one situation, the chopper in which LN Mittal was traveling towards Paris was force landed by telling them that the chopper entered the restricted area. The captain of the chopper was so upset that he resigned to avoid such pressures. Then again Arcelor tried to negotiate the deal with a Russian Steel giant Severstal who was one of its competitors in order to checkmate Mittal Steel. It was the toughest job for the Mr.Mittal to get the merger process evened out. Ultimately he succeeded in his bid and has become the President and CEO for Arcelor Mittal.

Now LN Mittal is the only Indian who controls any particular sector i.e. Steel sector in the world. No other Indian in the earth controls any particular sector but it has been made possible only for Mr.Mittal because of his passion and perseverance to become number uno steel czar in the world.

The global scenario has changed drastically especially after the liberalization and privatization in India. The rapid growing technology has made the globe smaller. People began understanding, respecting and adopting the cultures of other countries. At the global level it is essential to focus on multicultural skills. The cultural gap amongst all the countries is getting narrowed down. And there are more efforts and avenues to grasp various cultural diversities across the world. Many companies across the world are coming to India and setting up their shops. It demonstrates the strength of the Indian economy.

In the past we have seen global MNCs and now we are witnessing Indian MNCs shopping across the globe and acquiring number of strategically significant companies. In the past Indian companies fell prey to global predators and now there is a U turn where Indian companies have turned out to be predators.

The Indian economy is bullish with the GDP growing and inflation is within the healthy limits. Indians need not to go overseas to work. Rather they should work with in India itself so as to make Indian economy more vibrant. There are plenty of opportunities with in India itself. The foreign countries are getting more benefits by making use of Indian talent and expertise. What we get in return is far lesser than what we Indians invest in terms of abilities and capabilities to other countries. It is time Indians realized their inherent strengths and stayed in India itself.

India has the highest percentage of young productive population in the world where as the population of China is ageing. Since there is productive population and strong and huge human resources, India is set to become a developed country much before 2020 and will become a Super Power in the world by 2050.

“The dream is not what you see in sleep. Dream is the thing which does not let you sleep”.



TOBY