Cross Border Reorganisations, Mergers and Acquisitions - Essay Example

In the case of mergers, the taxpaying authority is either transferred to the new company or the transferred liability company. In the shape of transfers, the taxpaying authority is the transferee. However; in the case of a corporate structure; the contract is made as per the Joint Venture or by franchising.

And, the documents required legally depend on the specific structures of the combination.

There are some factors that explain clearly the problems being faced in the process of cross-border mergers in the financial sector in Europe & other parts of the world, and when analyzed, this draws a list of potential obstacles to cross-border mergers, for instance, the hurdles that would make a cross-border merger very difficult and impossible in other words. Speaking about the financial sector the focus is mainly put on the distinguishing factors between market segments when relevant. “Obstacles to consolidation in general (i.e. obstacles that impede domestic consolidation as well) are not covered.

Obstacles to forms of integration other than cross-border M&As (such as the direct cross-border provision of services) are also out of the scope of this paper, even though some obstacles might be relevant for different channels of integration. This list is aimed at providing all possible explaining factors, in order to serve at a later stage as a base for discussion on which of those obstacles should and could, be removed in order to achieve the objective of improving the functioning of the Internal Market for financial services.

It is not a policy paper, but a first analysis of the explanations behind the facts discussed” (Cartwright, et.al, 2006. P98). The British company that has business in the UK and that wants to work in the European Union or Europe can adopt one structure instead of moving the whole business there i.e. merging or reorganizing to that place in Europe. These rules and regulations are for those companies that want to merge together or want to make a joint venture with each other. This way the Managers in the UK are relying more on the mergers and they are considering it as a positive change to their business and they take it as a bright sign for their future businesses.

This is the cleanest way of doing business together of the two companies as there is no interference of the third party in this case, and this is considered to be the biggest advantage of this merger process altogether. The assets and the liabilities are not transferred in a traditional way rather they are considered the property of the merging parties. And these assets and liabilities merge automatically too in that case.

There is also no need of dissolving the transferring company and liquidate it at all, as when the merger takes place the dissolution happens automatically. This surely is a much better sign of combining the two companies together as there is no hassle of money transfers etc.

Tax relief - in the UK, re-organization tax reliefs may also apply to cross-border mergers of UK companies making them tax neutral.

One of the best solutions that this merger provides is the “Cost savings technique” which means a single corporate entity is created all together and therefore the merger between the two companies may help in an effective way the efficiencies in the business:

“The removal of a corporate entity from a group should result in a reduction in administration costs associated with running these entities in different jurisdictions, together with the potential for increased harmonization of contractual terms, business principles and policies in the single entity” (Scott, et.al 2008. P. 16).

The above are the main factors that the companies today are moving at a fast pace in all the sectors in the UK towards the merger process as there are tons of advantages associated with these mergers. So, the operational Managers that are not following these processes must take into consideration these to flourish their businesses in the future.

The cross-border mergers mostly until today have been involved in the restructuring of internal departments and processes like finance, accounts, etc., and he is done mostly to move the jurisdictional base of business. Therefore; this is the best route for those businesses who wish to streamline their business processes and make them up-to-date with the current market situations worldwide, involving cost matters and the marketing techniques all under one roof.