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ACQUISITION

SHORT NOTES ON ACQUISITION | CAIIB NOV STUDY MATERIAL 2022

In this article, the main focus is on Acquisition and related material along with CAIIB Nov Study Material 2022.

CAIIB EXAM DATES AND REGISTRATION DATES

The dates for the November-December session of the CAIIB Exam in 2022 have been made public by the IIBF. The dates for the 2022 CAIIB Exam are November 27, December 4, and December 10.

The November-December Session CAIIB Exam Date 2022 has been made available on the IIBF’s official website. The CAIIB November Exam 2022 online registration session will run from September 30, 2022, through October 20, 2022.

ACQUISITION MEANING

A company makes an acquisition when it buys the majority of all of the shares of another company in order to take over that business. The acquirer can make choices regarding newly acquired assets without the consent of the target company’s other shareholders if they buy more than 50% of the target company’s stock and other assets. Acquisitions, which are quite common in business, may take place with or without the target company’s consent. A no-shop clause is frequently present during the approval procedure.

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REASONS FOR ACQUISITION

For a variety of reasons, companies buy rival businesses. They can be looking for economies of scale, diversification, a bigger market share, more synergy, price cuts, or new specialized products. The following are some more justifications for purchases.

A means of breaking into a foreign market

The most straightforward approach to joining a foreign market for a business looking to expand operations is possible by purchasing an existing business there. The acquired company will enter a new market with a strong foundation because the acquired business will already have its employees, a brand identity, and other intangible assets.

As a strategy for growth

Perhaps a business ran out of funding or encountered logistical or physical challenges. When a company is burdened in this way, it is frequently wiser to acquire another company rather than grow its own. Such a business might search for potential young businesses to buy and add to its revenue stream as a new source of profit.

To lessen competition and excess capacity

Companies may turn to acquisitions to minimize excess capacity, eliminate competitors, and concentrate on the most productive suppliers if there is too much supply or rivalry.

Acquiring new technology

Sometimes it might be more cost-effective for a business to buy another firm that has already successfully deployed a new technology than it is to invest the time and resources to develop the latest technology from scratch.

TYPES OF MERGERS AND ACQUISITIONS

Some frequent deals that fall under the M&A category include the following:

  • Mergers
    • The boards of directors of the merging firms accept the union and request shareholder approval. For instance, the Digital Equipment Corporation and Compaq agreed to a merger in 1998, as a result of which Compaq acquired the Digital Equipment Corporation.
    • Later, in 2002, Compaq and Hewlett-Packard merged to form HP. Before the merger, Compaq’s ticker symbol was CPQ.
  • Acquisitions
    • In a straightforward acquisition, the acquiring corporation buys the majority of the acquired company, which keeps its name and organisational structure unaltered. The acquisition of John Hancock Financial Services by Manulife Financial Corporation in 2004 is an illustration of this kind of deal, where both businesses kept their organisational names and identities.
  • Consolidations
    • By integrating core companies and doing away with outdated organisational structures, consolidation results in the creation of a new company. Shares of common ownership in the new company are distributed to shareholders of the two companies who have approved the merger. As an illustration, the 1998 announcement of the merger between Citicorp and Travelers Insurance Group led to the creation of Citigroup.
  • Tender proposals
    • In a tender offer, one business proposes to buy the other business’s outstanding stock for a predetermined amount rather than the ongoing rate. Bypassing management and the board of directors, the acquiring business makes the offer straight to the shareholders of the target company.
  • Asset acquisition
    • One company directly purchases the assets of another company in an asset acquisition. The shareholders of the company whose assets are being bought must consent. It is customary during bankruptcy procedures for other businesses to bid on different assets belonging to the bankrupt company, which is then liquidated upon the ultimate transfer of assets to the purchasing businesses.

Read Also: CAIIB PREPARATION TIPS AND STUDY MATERIAL 2022

STRUCTURE OF ACQUISITION

Based on the relationship between the two companies involved in the deal, acquisition can be set up in a variety of ways:

  • A horizontal acquisition is the coming together of two businesses that compete directly and have similar markets and product lines.
  • The acquisition between a client and a business or between a business and a supplier. Think of an ice cream producer merging with a cone provider.
  • The congeneric acquisition involves two companies that provide the same clientele in various ways, like a TV manufacturer and a cable provider.
  • Acquisition of two businesses that sell the same goods in various markets.

FACTORS TO CONSIDER BEFORE MAKING AN ACQUISITION

A company must determine whether its target company is a good candidate before completing an acquisition.

  • Is the cost reasonable? Each industry has its own set of parameters that investors use to evaluate acquisition candidates. When acquisitions fall through, it’s frequently because the target company’s asking price is too high.
  • Look at the debt level. A target company’s exceptionally high level of liabilities should be taken as a sign that trouble may be on the horizon.
  • Excessive litigation Despite the fact that lawsuits are typical in business, a strong acquisition candidate does not have a litigation load greater than is acceptable and customary for its size and sector.
  • Examine the financials closely. Clear, orderly financial statements from a potential acquisition target make it easier for the acquirer to do due diligence. Financial information that is complete and clear also helps to avoid unpleasant surprises when the transaction is finished.

Read Also: CAIIB RESULT 2022 | HOW TO CHECK AND DOWNLOAD

CAIIB NOV 2022 STUDY MATERIAL

Learning Sessions used the most recent IIBF exam style and syllabus to develop the CAIIB Study Material. It includes:

  • Video sessions that are made topic-wise were produced by subject matter specialists.
  • Videos that explain contemporary concepts in accordance with the most recent CAIIB Syllabus 2022.
  • Hindi and English are used to create the lessons for all the subjects of the CAIIB exam nov 2022 except for ABM and BFM, in which case, video lectures only in english language are available.
  • Additionally, there are memory-based questions from prior CAIIB Exams in the package.
  • Live classes are also part of our package.
  • CAIIB Mock tests 2022 are also provided in our package for practice.
  • Video lectures can be downloaded offline, except for live YouTube videos and app courses.
  • Complimentary access to ePDF notes will also be available via the app. These notes serve as an addition to the video lectures.

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