He just slapped his name on it. Wikimedia Commons.
Trump lent his name to a condo tower in Tampa in and received a nice payday up front plus money on the back end. He was involved with small-time developers, the housing market bubble burst, and dozens of people lost huge down payments on property that was never built. Next: A business idea that only exists on paper. Donald Trump has dabbled in just about every business possible. Telecommunications was almost one of them. He trademarked the name Trumpnet in with the idea of getting into the corporate telecom game.
He was hoping to get a cut of the travel industry. The idea was to jump in the ring and take on Expedia, Hotels. The game was eventually pulled. Or at least he tried entertaining people. Next: He tried to sip on success in the s and early s. Trump was briefly looking to get into the beer business. In , he trademarked two beer ideas, a golden lager and an American pale ale. A few years later, he was back at it with Trump Fire and Trump Power , which were to be carbonated fruit juice drinks. These ideas never got past the initial planning stages.
Next: An utter failure in his area of expertise. The mortgage business went under less than two years later. Acquisitions are divided into "private" and "public" acquisitions, depending on whether the acquiree or merging company also termed a target is or is not listed on a public stock market. Some public companies rely on acquisitions as an important value creation strategy. Whether a purchase is perceived as being a "friendly" one or "hostile" depends significantly on how the proposed acquisition is communicated to and perceived by the target company's board of directors, employees and shareholders.
Hostile acquisitions can, and often do, ultimately become "friendly", as the acquiror secures endorsement of the transaction from the board of the acquiree company. This is known as a reverse takeover. Another type of acquisition is the reverse merger , a form of transaction that enables a private company to be publicly listed in a relatively short time frame.
A reverse merger occurs when a privately held company often one that has strong prospects and is eager to raise financing buys a publicly listed shell company, usually one with no business and limited assets. The combined evidence suggests that the shareholders of acquired firms realize significant positive "abnormal returns" while shareholders of the acquiring company are most likely to experience a negative wealth effect.
There are also a variety of structures used in securing control over the assets of a company, which have different tax and regulatory implications:. The terms " demerger ", " spin-off " and "spin-out" are sometimes used to indicate a situation where one company splits into two, generating a second company which may or may not become separately listed on a stock exchange.
As per knowledge-based views, firms can generate greater values through the retention of knowledge-based resources which they generate and integrate.
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Based on the content analysis of seven interviews authors concluded five following components for their grounded model of acquisition:. An increase in acquisitions in the global business environment requires enterprises to evaluate the key stake holders of acquisition very carefully before implementation. It is imperative for the acquirer to understand this relationship and apply it to its advantage.
Employee retention is possible only when resources are exchanged and managed without affecting their independence. Corporate acquisitions can be characterized for legal purposes as either "asset purchases" in which the seller sells business assets to the buyer, or "equity purchases" in which the buyer purchases equity interests in a target company from one or more selling shareholders.
Asset purchases are common in technology transactions where the buyer is most interested in particular intellectual property rights but does not want to acquire liabilities or other contractual relationships. There are numerous challenges particular to this type of transaction, including isolating the specific assets and liabilities that pertain to the unit, determining whether the unit utilizes services from other units of the selling company, transferring employees, transferring permits and licenses, and ensuring that the seller does not compete with the buyer in the same business area in the future.
Structuring the sale of a financially distressed company is uniquely difficult due to the treatment of non-compete covenants, consulting agreements, and business goodwill in such transactions. Mergers, asset purchases and equity purchases are each taxed differently, and the most beneficial structure for tax purposes is highly situation-dependent. One hybrid form often employed for tax purposes is a triangular merger, where the target company merges with a shell company wholly owned by the buyer, thus becoming a subsidiary of the buyer.
In a "forward triangular merger" , the buyer causes the target company to merge into the subsidiary; a "reverse triangular merger" is similar except that the subsidiary merges into the target company. Under the U. Internal Revenue Code , a forward triangular merger is taxed as if the target company sold its assets to the shell company and then liquidated, whereas a reverse triangular merger is taxed as if the target company's shareholders sold their stock in the target company to the buyer. The letter of intent generally does not bind the parties to commit to a transaction, but may bind the parties to confidentiality and exclusivity obligations so that the transaction can be considered through a due diligence process involving lawyers, accountants, tax advisors, and other professionals, as well as business people from both sides.
After due diligence is complete, the parties may proceed to draw up a definitive agreement, known as a "merger agreement", "share purchase agreement" or "asset purchase agreement" depending on the structure of the transaction. Such contracts are typically 80 to pages long and focus on five key types of terms: . Post-closing, adjustments may still occur to certain provisions of the purchase agreement, including the purchase price. These adjustments are subject to enforceability issues in certain situations. Alternatively, certain transactions use the 'locked box' approach where the purchase price is fixed at signing and based on seller's equity value at a pre-signing date and an interest charge.
Formal valuation reports generally get more detailed and expensive as the size of a company increases, but this is not always the case as the nature of the business and the industry it is operating in can influence the complexity of the valuation task. Objectively evaluating the historical and prospective performance of a business is a challenge faced by many. Generally, parties rely on independent third parties to conduct due diligence studies or business assessments. To yield the most value from a business assessment, objectives should be clearly defined and the right resources should be chosen to conduct the assessment in the available timeframe.
As synergy plays a large role in the valuation of acquisitions, it is paramount to get the value of synergies right. Synergies are different from the "sales price" valuation of the firm, as they will accrue to the buyer. Hence, the analysis should be done from the acquiring firm's point of view.
Synergy-creating investments are started by the choice of the acquirer, and therefore they are not obligatory, making them essentially real options.
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To include this real options aspect into analysis of acquisition targets is one interesting issue that has been studied lately. Mergers are generally differentiated from acquisitions partly by the way in which they are financed and partly by the relative size of the companies. Payment by cash. 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.
Payment in the form of the acquiring company's stock, issued to the shareholders of the acquired company at a given ratio proportional to the valuation of the latter. They receive stock in the company that is purchasing the smaller subsidiary.
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There are some elements to think about when choosing the form of payment. When submitting an offer, the acquiring firm should consider other potential bidders and think strategically. The form of payment might be decisive for the seller. With pure cash deals, there is no doubt on the real value of the bid without considering an eventual earnout.
The contingency of the share payment is indeed removed. Thus, a cash offer preempts competitors better than securities. Taxes are a second element to consider and should be evaluated with the counsel of competent tax and accounting advisers. Third, with a share deal the buyer's capital structure might be affected and the control of the buyer modified. If the issuance of shares is necessary, shareholders of the acquiring company might prevent such capital increase at the general meeting of shareholders.
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The risk is removed with a cash transaction. Then, the balance sheet of the buyer will be modified and the decision maker should take into account the effects on the reported financial results. For example, in a pure cash deal financed from the company's current account , liquidity ratios might decrease.
moforteenste.ml On the other hand, in a pure stock for stock transaction financed from the issuance of new shares , the company might show lower profitability ratios e. However, economic dilution must prevail towards accounting dilution when making the choice. The form of payment and financing options are tightly linked. If the buyer pays cash, there are three main financing options:. The following motives are considered to improve financial performance or reduce risk:.
However, on average and across the most commonly studied variables, acquiring firms' financial performance does not positively change as a function of their acquisition activity. The first element is important because the directors have the capability to act as effective and active bargaining agents, which disaggregated stockholders do not. But, because bargaining agents are not always effective or faithful, the second element is critical, because it gives the minority stockholders the opportunity to reject their agents' work. Therefore, when a merger with a controlling stockholder was: 1 negotiated and approved by a special committee of independent directors; and 2 conditioned on an affirmative vote of a majority of the minority stockholders, the business judgment standard of review should presumptively apply, and any plaintiff ought to have to plead particularized facts that, if true, support an inference that, despite the facially fair process, the merger was tainted because of fiduciary wrongdoing.
A Strategic merger usually refers to long term strategic holding of target Acquired firm. The term "acqui-hire" is used to refer to acquisitions where the acquiring company seeks to obtain the target company's talent, rather than their products which are often discontinued as part of the acquisition so the team can focus on projects for their new employer.
In recent years, these types of acquisitions have become common in the technology industry, where major web companies such as Facebook , Twitter , and Yahoo! Merger of equals is often a combination of companies of a similar size.