Mergers and Acquisitions Analysis

Subject: Company Analysis
Pages: 2
Words: 611
Reading time:
3 min
Study level: College


Growth in any form of organization is very important so that a firm is in the position of sustaining itself. Sustainability may be in form of influencing its viability, structural changes, capacity building of the organization or value addition to the operations of the firm (DePamphilis 2001). If a firm is growth oriented, then chances that it is likely to attract qualified and competent staff is very high. This would, in turn, result into a bust in its activity.

The company activity may witness a bust in form of profitability and even in the shareholding value to the owners of the firm. The sure rest way in which a firm is likely to attain it growth is through corporate strategies of which the most likely one is through mergers and acquisitions (Vachon 2007). The other could be the establishments in the form of green field projects, which require an entire establishment of a completely new firm.

Greenfield projects

These are entirely new establishments. The firm identifies a totally new and foreign land, which is attractive to the project that it is interested in undertaking. It may require that the firm start by building premises, which is very costly. Developing a market is also difficult in the foreign land, hence, for the business of the firm, to pick may be a challenge. Without subsidies and even tax, cuts from the country of establishment, then it may be a nightmare to start Greenfield projects (DePamphilis 2001).


Acquisitions just as mergers are the popular ways of restructuring companies. It is one of the ways in which businesses combine and it has always led to the massive external growth of many companies across the globe (DePamphilis 2001).

These two practices have hit a record high in-developed countries given they mostly have already established firms in rapid faces of progress. Acquisition is a way in which a firm takes the shares held by another firm so that the firm becomes part of it (Vachon 2007). Acquisition involves as well the takeover of the assets and liabilities of the firm, which, in most cases, a smaller firm, which is acquired by a bigger firm (Vachon 2007). Acquisitions, in most cases, take place through purchase of one company by another. Acquisitions may be public or private, this depends on whether the company undergoing the process is listed in the stock market or not. From relevant statistics, it has always been witnessed that only about 50% of the past acquisitions have been successful since the acquisition process is very complex (DePamphilis 2001).


Mergers, on the other hand, may be like acquisition but, here, involve forms which are of the same size and operation combining. They may be having the same assets and liabilities. They then agree to combine their operations to expand their growth in term of shareholder growth or profitability. Under mergers, stocks are surrendered and new listings take place, ownership does not change but only the name and the forms of operation. The form of operation, in this case, may be complex and require wide range of expertise since the firm becomes bigger (Vachon 2007).

Option of choice

The option that is better be chosen may be the merger option since it is expensive to start green field projects. Acquisition, on the other hand, poses a challenge since the ownership of the firm completely changes and the acquisition process is also equally complex. Therefore, a merger is the best choice that I would recommend to “Baderman Island Resort” as a way to expand its operation. This is given the fact that it is simple and would enhance continuation in the operations of the firm.


DePamphilis, D. M. (2001). Mergers, acquisitions, and other restructuring activities: an integrated approach to process, tools, cases, and solutions. San Diego: Academic Press.

Vachon, D. (2007). Mergers & acquisitions. New York: Riverhead Books.