Major Peculiarities of Mergers - Essay Example

Mergers are part of reforming a business that involves two companies coming together to create a big organization that pleases shareholders (Albizzatti and Sias, 35-28).

One factor that may make two companies succeed in merging is by integrating their data thus it will be easier to achieve the shareholder's value. According to Gaughan (2009), this strategy is mostly used in tough economic times where those companies which cannot survive the competition in the market are bought-off by the strong companies in the market. Stanwick (16-11) descries that this enables the companies to improve their competitive nature as other companies merge hoping to increase their share in the market and thus will produce more than they would have if they were to operate by themselves.

This study shows the possibilities that would make a company such as SLP want to merge with another one. It will also show how the mergers are financed and finally, it shows the second and the third company to be chosen as a merger giving reasons for each. In my opinion, if I was to pick a company to merge with between Dell and Intel it would be Dell. This is because it has more benefits to the company than Intel. Perry and Herd (19-12) show that Dell is a multinational company and it already has a big market share all over the world which has been estimated to be 20 percent.

This advantage would make SLP Company be in a position of venturing the global market as Dell would increase its industrial visibility. Dell is a company that deals with computers and SLP companies are involved in vehicles. Their merging type would be in the form of extending their product as the businesses are different but the products are somehow related. If Dell was to takeover SLP it would achieve more benefits of economies of scale as the size would increase as well as its product line. To pay for the deal the best way would be through fixed value stock. This is where the shares are fixed in that the buyer’s shareholders may run at either a risk or profit at the closing period (McDonald 2006).

Technology will also increase for Dell will want to beat SLP competitors and maintain its competitive edge. Intel Company would be my second choice of the companies I would want to merge with. This is because the products it deals with are not so related to those of SLP Company. In conclusion, it is advisable for companies wishing to merge to observe due diligence in their targets. This helps to understand each other thus M&A strategy becomes a success. Other characteristics observed included culture, skills, and features as well as if the company is capable of achieving the financial objectives of the other.