Bootstrapping Earnings
Bootstrapping earnings (or bootstrap effect) occurs when a company’s earnings increase because of the merger transaction instead of the resulting economic benefit of the merger. Example: Bootstrapping Earnings Axon Ltd. has identified an opportunity to merge with Symbian systems to…
Motivations behind Mergers
Synergy Synergy is the concept that the combined performance and value of two companies will be greater than the sum of the separate parts. Synergies created through mergers will either increase revenues or reduce costs through economies of scale in…
Classification of Mergers and Acquisitions
The financial and operational consequences of mergers and the motive for the mergers are key aspects that management and analysts need to understand. An acquisition occurs when a company purchases a portion or all of another company’s shares, effectively controlling…
