Meaning of acquisition: An acquisition, also known as a takeover, is the buying of one company (the target) by another.

An acquisition maybe friendly or hostile. In the former case, the companies cooperate in negotiations; in the latter case, the takeover target is unwilling to be bought or the target's board has no prior knowledge of the offer. Acquisition usually refers to a purchase of a smaller firm by a larger one. Sometimes, however, a smaller firm will acquire management control of a larger or longer established company and keep its name for the combined entity. This is known as a reverse takeover.

Types of takeover
[edit]Friendly

takeovers

Before a bidder makes an offer for another company, it usually first informs the company's board of directors. In an ideal world, if the board feels that accepting the offer serves shareholders better than rejecting it, it recommends the offer be accepted by the shareholders. In a private company, because the shareholders and the board are usually the same people or closely connected with one another, private acquisitions are usually friendly. If the shareholders agree to sell the company, then the board is usually of the same mind or sufficiently under the orders of the equity shareholders to cooperate with the bidder. This point is not relevant to the UK concept of takeovers, which always involve the acquisition of a public company. [edit]Hostile

takeovers

A hostile takeover allows a suitor to take over a target company whose management is unwilling to agree to a merger or takeover. A takeover is considered "hostile" if the target company's board rejects the offer, but the bidder continues to pursue it, or the bidder makes the offer directly after having announced its firm intention to make an offer. A hostile takeover can be conducted in several ways. A tender offer can be made where the acquiring company makes a public offer at a fixed price above the current market price. Tender offers in the United States are regulated by the Williams Act. An acquiring company can also engage in a proxy fight, whereby it tries to persuade enough shareholders, usually a simple majority, to replace the management with a new one which will approve the takeover. Another method involves quietly purchasing enough stock on the open market, known as a creeping tender offer, to affect a change in management. In all of these ways, management resists the acquisition but it is carried out anyway. The main consequence of a bid being considered hostile is practical rather than legal. If the board of the target cooperates, the bidder can conduct extensive due diligence into the affairs of the target company, providing the bidder with a comprehensive analysis of the target company's finances. In contrast, a hostile bidder will only have more limited, publicly-available information about the target company available, rendering the bidder vulnerable to hidden risks regarding the target company's finances. An additional problem is that takeovers often require loans provided by banks in order to service the offer, but banks are often less willing to back a hostile bidder because of the relative lack of information about the target available to them. [edit]Reverse

takeovers

Main article: Reverse takeover

A reverse takeover is a type of takeover where a private company acquires a public company. This is usually done at the instigation of the larger, private company, the purpose being for the private company to effectively float itself while avoiding some of the expense and time involved in a conventional IPO. However, under AIM rules, a reverse take-over is an acquisition or acquisitions in a twelve month period which for an AIM company would: exceed 100% in any of the class tests; or result in a fundamental change in its business, board or voting control; or

in the case of an investing company, depart substantially from the investing strategy stated in its admission document or, where no admission document was produced on admission, depart substantially from the investing strategy stated in its pre-admission announcement or, depart substantially from the investing strategy. An individual or organization-sometimes known as corporate raider-can purchase a large fraction of the company's stock and in doing so get enough votes to replace the board of directors and the CEO. With a new superior management team, the stock is a much more attractive investment, which would likely result in a price rise and a profit for the corporate raider and the other shareholders. [edit]Backflip

takeovers

A backflip takeover is any sort of takeover in which the acquiring company turns itself into a subsidiary of the purchased company. This type of takeover rarely occurs[citation needed]. [edit]Financing [edit]Funding Often a company acquiring another pays a specified amount for it. This money can be raised in a number of ways. Although the company may have sufficient funds available in its account, remitting payment entirely from the acquiring company's cash on hand is unusual. More often, it will be borrowed from a bank, or raised by an issue of bonds. Acquisitions financed through debt are known asleveraged buyouts, and the debt will often be moved down onto the balance sheet of the acquired company. The acquired company then has to pay back the debt. This is a technique often used by private equity companies. The debt ratio of financing can go as high as 80% in some cases. In such a case, the acquiring company would only need to raise 20% of the purchase price. [edit]Loan

a takeover

note alternatives

Cash offers for public companies often include a "loan note alternative" that allows shareholders to take a part or all of their consideration in loan notes rather than cash. This is done primarily to make the offer more attractive in terms of taxation. A conversion of shares into cash is counted as a disposal that triggers a payment of capital gains tax, whereas if the shares are converted into othersecurities, such as loan notes, the tax is rolled over. [edit]All

share deals

A takeover, particularly a reverse takeover, may be financed by an all share deal. The bidder does not pay money, but instead issues new shares in itself to the shareholders of the company being acquired. In a reverse takeover the shareholders of the company being acquired end up with a majority of the shares in, and so control of, the company making the bid. The company has managerial rights.

Pros and cons of takeover

While pros and cons of a takeover differ from case to case, there are a few worth mentioning. Pros:

1.
2. 3. 4. 5. 6. 7.

Increase in sales/revenues (e.g. Procter & Gamble takeover of Gillette) Venture into new businesses and markets Profitability of target company Increase market share Decrease competition (from the perspective of the acquiring company) Reduction of overcapacity in the industry Enlarge brand portfolio (e.g. L'Oral's takeover of Bodyshop) Increase in economies of scale

8.

9. Increased efficiency as a result of corporate synergies/redundancies (jobs with overlapping responsibilities can be eliminated, decreasing operating costs) Cons: Goodwill, often paid in excess for the acquisition. 2. Reduced competition and choice for consumers in oligopoly markets. (Bad for consumers, although this is good for the companies involved in the takeover) 3. 4. 5. 6. 7. Likelihood of job cuts. Cultural integration/conflict with new management Hidden liabilities of target entity. The monetary cost to the company. Lack of motivation for employees in the company being bought up. 1.

Takeovers also tend to substitute debt for equity. In a sense, government tax policy of allowing for deduction of interest expenses but not of dividends, has essentially provided a substantial subsidy to takeovers. It can punish more conservative or prudent management that don't allow their companies to leverage themselves into a high risk position. High leverage will lead to high profits if circumstances go well, but can lead to catastrophic failure if circumstances do not go favorably. This can create substantial negative externalities for governments, employees, suppliers and otherstakeholders.

Performance Appraisal Effectiveness MBA (Human Resources) 28 Aim of the Research To ascertain the effectiveness of Performance Appraisal methodology used by the Organization.

Objectives of the study The following are the objectives of the study To develop my understanding of the subject. o Performance Appraisal System implemented in various Organizations varies according to the need and suitability. Through my research, I have tried to study the kind of Appraisal used in the Organization and the various pros and cons of this type of system. To conduct a study on social behavior. o Social behavior is a very unpredictable aspect of human life but social research is an attempt to acquire knowledge and to use the same for social development. To enhance the welfare of employees. o The Appraisal system is conceived by the Management but mostly does not take into consideration the opinion of the employees. This can lead to adverse problems in the Organization. Therefore by this study I have attempted to put forth the opinion of the employee with respect to the acceptability of the Performance Appraisal System. To exercise social control and predict changes in behavior. o The ultimate object of my research is to make it possible to predict the behavior of individuals by studying the factors that govern and guide them.Performance Appraisal Effectiveness MBA (Human Resources) 29 Research Design A research design is a type of blueprint prepared on various types of blueprints available for the collection, measurement and analysis of data. A research design calls for developing the most efficient plan of gathering the needed information. The design of a research study is based on the purpose of the study. A research design is the specification of methods and procedures for acquiring the information needed. It is the overall pattern or framework of the project that stipulates what information is to be collected from which source and by what procedures.Performance Appraisal Effectiveness MBA (Human Resources)

30 Sampling An integral component of a research design is the sampling plan. Specifically, it addresses three questions Whom to survey (The Sample Unit) How many to Survey (The Sample Size) & How to select them (The Sampling Procedure) Making a census study of the whole universe will be impossible on the account of limitations of time. Hence sampling becomes inevitable. A sample is only a portion of the total employee strength. According to Yule, a famous statistician, the object of sampling is to get maximum information about the parent population with minimum effort. Methods of Sampling Probability Sampling is also known as random sampling or chance sampling . Under this sampling design every individual in the organization has an equal chance, or probability, of being chosen as a sample. This implies that the section of sample items is independent of he persons making the study that is, the sampling operation is controlled objectively so that the items will be chosen strictly at random. Non Probability Sampling is also known as deliberate sampling , purposeful and judgmental sampling. Non-Probability Sampling is that which does not provide every individual in the Organization with a known chance of being included in the sample.Performance Appraisal Effectiveness MBA (Human Resources) 31 Data collection method Collection of data is the first step in statistics. The data collection process follows the formulation for research design including the sample plan. The data can be secondary or primary. Collection of Primary Data during the course of the study or research can be through observations or through direct communication with respondents on one form or another or through personal interviews. I have collected primary data by the means of a Questionnaire. The Questionnaire was formulated keeping in mind

the objectives of the research study. Secondary data means data that is already available i.e., they refer to data, which has already been collected and analyzed by someone else. When a secondary data is used, the researcher has to look into various sources from where he can obtain data. This includes information from various books, periodicals, magazines etc.Performance Appraisal Effectiveness MBA (Human Resources) 32 Research Methodology Adopted Research Design : Descriptive research Research Instrument : Structured Questionnaire Sampling Plan i) Sample Method : Non-Probability Sampling (Convenience Sampling) ii) Sample Size : 50 iii) Sample Unit : Employees who do not hold a supervisory position Sampling Design Convenience Sampling, as the name implies, is based on the convenience of the researcher who is to select a sample. Respondents in the sample are included in it merely on account of their being available on the spot where the survey was in progress. Source of Data a) Primary Data : Structured Questionnaire b) Secondary Data : Journals, Booklets, Company Data, etc.