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вопросы к экзамену 2 курс (1).doc
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1. What are good and wrong reasons for mergers and acquisitions?

Good reasons:

  • - improving earnings

  • - asset growth

  • - developing synergies

  • - making economies of scale

  • - increasing market share

  • - cross-selling

  • - diversification

Wrong reasons:

They mainly involve excessive pride or arrogance on the part of management, e.g. wanting to build too big an empire, too quickly, and overextending the financial, commercial and human capacity of the organization.

2. What are the five Gs of a possible acquisition?

  • Goals: the goals of both companies must be compatible.

  • Gains: there must be real gains in terms of economies of scale, big enough to compensate for becoming less reactive.

  • Genes: company cultures must be compatible.

  • Geography: head offices of the two companies should be geographically close.

  • Growth: the merger must unquestionably allow the company to grow.

3. How are mergers and acquisitions perceived by employees/ shareholders/ customers/ the general public?

  • Employees get worried about redundancies, having more office, etc. Workforces are generally resistant to change.

  • Shareholders like mergers if it means that they will profit from M&As.

  • Customers sometimes worry about losing contact with the company as they know it, especially if they are loyal, established customers. They might worry about a change in the quality of the company’s products or services.

  • The general public can view M&As with distrust or they may not even know that a particular company has merged with or acquired another company.

4. Give examples of a company’s performance.

+: --:

  • to be in the black - go under

  • cover costs - go to the wall

  • break even - go bankrupt

  • make a profit - to be in the red

  • grow slightly, improve significantly, go up sharply, shoot up dramatically +

  • a slight increase, considerable improvement, moderate growth, a sudden surge +

1. What problems may an acquisition bring to a target company?

People inside the target company will be less happy – they will be worried about their jobs. The larger company who is buying them is unlikely to need two marketing directors, two finance directors, and the extra middle managers. Indeed, one of the main arguments in favour of the acquisition will have been precisely this – to make cost savings by merging budgets and running the same business with fewer employees. In relation to the board of the target company – they may be prepared to flight for their independence if the takeover is hostile, or they may be pleased.

Business Vocabulary in Use

5. What types of stakes do you know? (u.34)

A stake (an interest / a holding) in a company is the shares that an investor has in a company.

A majority stake (interest / holding) when more than half if a company’s shares are owned by one investor, giving them control over how the company is run

A minority stake (interest / holding) when fewer than half of a company’s shares are owned by one investor