Mergers and acquisitions (M&A)

RECENT NEWS
The Economic Times  Apr 13  Comment 
Many people who have got stuck midway in their hotels, they are really impacted in the big way.
The Economic Times  Apr 13  Comment 
The January-March quarter recorded $33.7 billion across 300 deals marking a sharp increase in value as compared to $10.9 billion in the same period last year.
The Economic Times  Apr 13  Comment 
In the last one decade, from Vodafone-Idea to MakeMyTrip-GoIbibo merger, Rajat Sethi's small-size law firm S&R Associates is giving the big firms a run for their money
WA Business News  Apr 10  Comment 
SPECIAL REPORT: The mergers and acquisitions market was eventful in the March quarter, with Chinese and private equity investors to the fore, multiple WA businesses on the block, and a surprise advisory switch on a key takeover.
Forbes  Apr 8  Comment 
Estimates are that about 20% of middle market companies are "ready for sale." To prep your firm and enhance value, management consultants and exit planners are key. But, before that, the owner must develop a "magical" mindset about the firm --...
Insurance Journal  Apr 6  Comment 
Signs point to 2017 being another year of “robust” mergers and acquisitions, thanks in part to a number of ongoing industry trends and a current government climate that show no sign of letting up, Conning said in a new report. …




 
TOP CONTRIBUTORS

How Stocks react to M&A

When companies announce that they are going to be buying other companies, the stock prices of both institutions react. However, they don't usually react the same way. One stock price typically goes up while the other stock price typically goes down.

The Price of One Stock Goes Up

The stock that usually benefits the most from a merger or an acquisition is the stock of the company that is being acquired. In most cases, the stock price of the company that is being acquired goes up.

The reason the stock price of the company being acquired typically goes up is the company that is doing the acquiring usually pays a premium for the stock of the company it is acquiring. For instance, when Pfizer announced it was going to acquire Wyeth, the price of Wyeth stock jumped higher.

The Price of the Other Stock Goes Down

The stock that usually benefits the least—at least in the short term—from a merger or an acquisition is the stock of the company that is doing the acquiring. In most cases, the stock price of the company doing the acquiring goes down.

The reason the stock price of the company doing the acquiring typically goes down is the company is taking on increased risk by acquiring the new company. Companies involved in mergers and acquisitions like to talk about the "synergies" the combination of the two companies will create, but there are no guarantees combining two companies will result in improved performance and profits

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