Merger means when two or more company combined with each other and either make a single entity or one company lose its entity and other company continued his business. Horizontal merger - Two companies that are in direct competition and share the same product lines and markets. Vertical merger - A customer and company or a supplier and company. Think of a cone supplier merging with an ice cream maker.
An acquisition is the purchase of one business or company by another company in purchased consideration. Mergers are well recognized.
Main issues at time of merger:
- Human resources
- Taxation
- Accounting
- Technology related issue
- Integration of products and services
- Shareholders interest
- Legal issue
Human resources:
It is the main issue at the time of merger. Workers and employees never want to merge the company because of loss of his individualist. So that it is necessary that positive motivate to the employees. When company merge between the two companies then motivate to the employee no loss to the company and never adverse effect on the company.
Taxation:
Different- 2 companies have different rules and regulation. So that When merges the two companies then taxation rate also change with the change the company.
Accounting:
Mostly, different company prepares the accounts in a different way so that when at the time of merge the company then it is very necessary to bring the consolidation between the two companies.
Technology related issue:
It is the main issue at the time of merger. When merge the company then both of the two companies have different technology then company may be suffered from the major problems. So it is necessary that at the time of merger take care both the company have same techniques. In order to have desired results of merger it is required to have meaningful integration of technology with cost effectiveness quality and improving the skill of the work force.
Integration of products and services:
After merge the company, when same technique then no problem but sometime creates monopoly in the market. Customer suffered from the major problems to decide what type of product is purchased or not. For create the monopoly, less the competition in the market because more competition then best quality in the product.
Shareholders interest:
Employee always thinks that at the time of merger always decrease the interest rate. When company distribute Rs.100, 000 to the 100 shareholder after merge surplus distribute among 200 shareholder. But he doesn’t after the merge the company always increases the profit.
Legal issue:
It is necessary that always follow the RBI rules and regulation at the time of merger. It is necessary to inform the legal authority.
It is necessary that always follow the RBI rules and regulation at the time of merger. It is necessary to inform the legal authority.