Due Diligence and M&A

Due Diligence
A merger is when 2 companies with the nearly the same size decide to fuse into one.

A acquisition is when a big company decide to fuse with a smaller one. Often resulting in the disapearanc of the smaller one.

We talk about hostile take over when one company buy an other that do not want to be bought.

Is merger a good or a bad news ?
For employee, M&A are usualy bad news because it often leads to restructuration and lay off.

For the investors of the bigger companies, it is a bad news as the share value will decrease as the company will have less money to pay dividends.

For the investor of the smaller one, it is a very good news as the share price tend to increase.

For suppliers, this is a bad news as the new company will use this occasion to renegotiate the contracts.

Customers should usualy not be happy, because the new company will rely on its best seller and wont have the money to invest in new products. After the hypothetical EOS, the prices may lower.

Michael Porter believed that the significant synergies are gain through human capital optimization.