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Tuesday 19 March 2013

Merger theory

My  actual "notes" are delivered on my other blog called Blogdaleupsome.Some of the theory of my "notes" will be explained on this blog.One of the reasons given in the Harvard Business Review for mergers creating synergies is that both companies must have similar corporate cultures.My "notes"allow and set up situations where both companies have similar corporate cultures.I buy shares in the smaller company in smaller amounts.This gives(in theory) a chance for the acquiring company to become familiar with the smaller company in a non-threatening situation.As the acquirer gets more of the shares gradually the two corporate cultures start to merge also.This ,I believe , is more effective than the situation where all the shares are bought in one short period.In addition,it gives a chance for the two chief executive officers to get to know each other on a gradual basis.This is certainly one reason I expect the synergies from my method to be greater than ordinary mergers.
Workathon

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