Overview of Mergers and Acquisitions
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Business combinations are a common way for companies to grow in size, rather than growing through organic (internal) activities. There are several methods for achieving a business combination. A good acquisition will generate greater benefits, in present value terms, than its costs. A company acquiring another will frequently pay for the other company with 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 alone.