How To Use ‘mergers And Acquisitions’ News To Make Money

By Author: Farrel Dsouza
Total Articles: 18
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The following article will convey the strategy of earning money online by publishing up to date Mergers and Acquisitions news , stock picking strategies and live stock market news in a blog.

Usually mergers and acquisitions news are announced after the successful completion of negotiations mainly due to the secrecy involved in the move. Many failed negotiations never come to light. The process of negotiations for mergers and acquisitions involves the participation of many professional groups, such as investment bankers, consultants and lawyers specializing in the field and interim managers. However, people who wish to make money out of investing in companies that are being merged need to do a lot of research with inputs from latest stock market updates and stock picking strategies. The current financial crisis has opened up many opportunities for investors to make money out of mergers and acquisitions.

A typical acquisition process starts with an offer being made by the ...
... buyer to the company that is being targeted for acquisition at a rate that is higher than the current stock price of the seller. The premium being offered serves as an incentive for the seller to accept the offer. The shareholders of the seller’s company will definitely gain if the offer is in cash and if the deal is executed successfully.

Companies that are going through turbulent times find it tempting to merge in order to become more competitive, cost-effective and most importantly to create a bigger market share. More often than not, when a company targets another company for a merger, the targeted company is weak and unable to survive on its own. When the weaker company is taken over by a stronger company, it is said to have been acquired. The acquired company ceases to exist and the buyer can still trade stocks.

When two companies merge, a system known as ‘synergy’ is adopted by the both. This allows them to develop more cost efficiencies on the new business. The system involves revenue enhancement and cost savings, achieved by reducing staff, acquiring new technology, expanding market reach and greater industry visibility. Job losses are quite common during mergers and acquisitions. Moreover, the CEO of the targeted company leaves with a compensation package.
For investors to make money through mergers and acquisitions, it is essential to take care of certain contingencies. It will be necessary for the investor to keep track of mergers and acquisitions news and latest stock market updates and adopt the right stock picking strategies. Moreover, the investor must assess that the deal would go through in all probability. Secondly, the shareholders must be presented with a premium with the bid being higher than the current stock price. It is also essential that the offer is in cash as such offers are easy to value. The fluctuations in the buyer’s stock prices can lead to stock deals changing values.

Investors in companies get affected when mergers between two companies take place. As such, it is essential for business owners to think and decide carefully whether to go ahead with the merger. Basically, companies merge in order to create share value. It would only be wise to merge if this value is greater than the total of both the companies. The value of two merged companies is always higher.