statutory merger

(noun)

A type of merger whereby one of the companies remains a legal entity, rather than a part of an entirely new legal entity.

Related Terms

Examples of statutory merger in the following topics:

  • Reasons for Combining Businesses

    • Business combinations are referred to as mergers.
    • In practice, however, actual mergers of equals don't happen very often.
    • A merger can also be achieved independently of the corporate mechanics through various means - such as triangular merger, statutory merger, etc.
    • Every merger has specific reasons why the combining of the two companies is a good business decision.
    • Additional motives for a merger that may not add shareholder value include:

  • Tax Rate

    • A statutory tax rate is the legally imposed rate.
    • An income tax could have multiple statutory rates for different income levels, whereas a sales tax may have a flat statutory rate.

  • The Role of an Advisor

    • The advisory group of an investment bank is primarily concerned with facilitating the mergers and acquisitions of businesses.
    • M&A stands for "mergers and acquisitions", which refers to the the buying, selling, dividing and combining of different firms.
    • Pricewaterhouse Cooper got it's name after the 1998 merger of Price Waterhouse and Coopers & Lybrand.

  • Other Topics in M&A

    • Despite the goal of value creation and synergy, results from mergers and acquisitions are often disappointing compared with results that are predicted or expected.
    • The turnover in target companies has been found to be double the turnover experienced in non-merged firms for the 10 years following the merger.
    • A form of corporate cooperation lying between a merger or acquisition and internal growth is called a corporate alliance, or strategic alliance.
    • When raising funds for a merger or acquisition, firms may not seek funds from public offerings - either out of necessity or by choice.
    • Divestment of certain parts of a company can occur when required by the Federal Trade Commission before a merger with another firm is approved.

  • Valuing the Target and Setting the Price

    • In order to prepare an appropriate bid in the mergers and acquisition process, the buyer must be able to accurately value the target company.
    • Due diligence can be defined as the examination of a potential target for merger, acquisition, privatization, or a similar corporate finance transaction– normally by a buyer.
    • This is in order to reduce the number of failed mergers and acquisitions.

  • Types of Transactions

    • Transactions can be mergers or acquisitions, made with cash or stock, and they can be friendly or hostile.
    • Such transactions are usually termed acquisitions rather than mergers because the shareholders of the target company are removed from the picture and the target comes under the (indirect) control of the bidder's shareholders.
    • In the aftermath of a merger, there will be accounting issues to consider.
    • Pictured is a plane belonging to United Airlines, one of the world's largest carriers, fresh off a 2010 merger with Continental Airlines.
    • Choose the best strategy and method for completing a merger or acquisition

  • Surprises and Returns

    • Announcements of Mergers and acquisitions (M&A) are a frequent type of surprise announcements.
    • Mergers and acquisition is a category of announcement that deals with corporate structure.
    • A merger or an acquisition could signal to an analyst that one particular company is financially weak, and it could downgrade its long run outlook for that company.

  • Overview of Investment Banking Functions in M&A

    • The investment bank's role in mergers and acquisitions falls into one of either two buckets: seller representation or buyer representation (also called "target representation" and "acquirer representation").
    • One of the main roles of investment banking in mergers and acquisitions is to establish fair value for the companies involved in the transaction.
    • For instance, if a bank has performed valuation on a potential target company that suggests its market value (or the value of its shares in the marketplace) is less than what the business is actually worth, it may facilitate a merger or acquisition of this target company for its client that carries with it substantial profit opportunity.
    • Investment banks, such as Barclays (the headquarters for which is pictured here), play a vital role in the mergers and acquisitions process.

  • Agency

    • A private firm might hire an investment bank for help with a merger or acquisition or for issuing an IPO (initial public offering of shares).

  • Cash Flow from Investing