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VTU MBA Syllabus M&A-module 1 by Shankaregouda BITM-Ballari
VTU MBA Syllabus M&A-module 1 by Shankaregouda BITM-Ballari
Basic Concepts
Merger :a statutory combination of two or more
companies into a single company, in such a way
that only one survives while the other is
dissolved.
A. Technical efficiencies
More control over quality & delivery of inputs
/Products
Premium for branded products avoided if those are
made internally
Creation of control over production
Leakage of private information to supplier is avoided
Value Creation in Vertical Mergers
The economic rationale for vertical mergers is derived from
the comparative efficiency of vertical integration in terms
of the technical and coordination efficiency.
A. Technical efficiencies
B. Coordination efficiencies
Bargaining power of supplier is avoided
Contract enforcement costs are minimized
Free-riding by distributors on the reputation of
manufacturers is avoided
Value Creation in Vertical Mergers
The economic rationale for vertical mergers is derived from
the comparative efficiency of vertical integration in terms
of the technical and coordination efficiency.
A. Technical efficiencies
B. Coordination efficiencies