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THE USE OF MERGER AND ACQUISITION AS A GROWTH STRATEGY IN NIGERIAN ORGANIZATIONS

1.2 BACKGROUND OF STUDY 

Business combinations which may take forms of mergers, acquisitions, amalgamation and take-overs are important features of corporate structural changes. They have played an important role in the external growth of a number of leading companies the world over. In Nigeria, mergers and acquisitions were not so common, until recently due to the economic melt down. The present economic climate in the country which is characterized by shortage of foreign exchange for the importation of goods, low exchange rate of the Naira, the restrictive credit policies coupled with the agenda of privatization and globalization worldwide have increased business risks and pose serious threats to their long term survival. As a result, previously autonomous businesses have recently, since the year 2000, been taking advantage of mergers and acquisitions, particularly in the oil and gas, textile, insurance, banking and conglomerates sectors of the economy to form larger concerns needed to reduce their risks and guarantee better chances of survival. At this instant let’s look at the definition of merge and acquisition. The term merger and acquisition according to (Belverd, 1999; 89)1refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance or help a growing company in a given industry to grow rapidly without having to create another business entity. Even though they are always referred to as the same thing, they have some differences. The term merger happens when two firms, often of about the same size agree to go forward as a single new company rather than remain separately owned and operated. A merger contemplates a transfer of properties and liabilities of one or more companies to another, such transfer does not include rights and obligations, which are not transferable such as contracts of personal service. Thus, one or more companies may merge with an existing company through absorption or they may merge to form a new company through consolidation. While acquisition is when one company takes over another and clearly establishes itself as the new owner. To explain further it is said to be an act of acquiring effective control by one company over assets or ownership and management of another company without any combination of companies. Thus, in an acquisition two or more companies may remain independent, separate legal entity, but there may be change in control of the companies. In this regard, acquisition connotes a take-over, that is, the acquisition of control over the target company. And, in business and commercial terms, the expression 'acquisition' is properly used interchangeably with the term 'take-over' as distinct from a merger. The adoption of merger and acquisition offers many benefits to the companies which includes increased value generation, increase in cost generation and increase in market share. Another reason for this is the belief that synergies exist, allowing the companies to work more efficiently together than either would separately. Such synergies may result from the firms combined ability to exploit economies of scale, eliminate duplicated functions, share managerial expertise and raise larger amounts of capital. Through the adoption of merger and acquisition, company executives who suffered a lot while attempting to bring up sagging turnover figures are now able to solve some of the problems which were initial thought to be impossible. As a result of the above mentioned reason and the struggle by companies to survive the economic melt down, merger and acquisition are fast gaining prominence.

Project detailsContents
 
Number of Pages77 pages
Chapter one Introduction
Chapter two Literature review
Chapter three  methodology
Chapter  four  Data analysis
Chapter  five Summary,discussion & recommendations
ReferenceReference
QuestionnaireQuestionnaire
AppendixAppendix
Chapter summary1 to 5 chapters
Available documentPDF and MS-word format


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