Subject: FINANCIAL MANAGEMENT
Course Code: M. Com

Author: Dr. Suresh Mittal

Lesson: 1

Vetter: Dr. Sanjay Tiwari

FINANCIAL MANAGEMENT OF BUSINESS
EXPANSION, COMBINATION AND ACQUISITION
STRUCTURE
1.0

Objectives

1.1

Introduction

1.2

Mergers and acquisitions
1.2.1 Types of Mergers
1.2.2 Advantages of merger and acquisition

1.3

Legal procedure of merger and acquisition

1.4

Financial evaluation of a merger/acquisition

1.5

Financing techniques in merger/Acquisition
1.5.1 Financial problems after merger and acquisition
1.5.2 Capital structure after merger and consolidation

1.6

Regulations of mergers and takeovers in India

1.7

SEBI Guidelines for Takeovers

1.8

Summary

1.9

Keywords

1.10 Self assessment questions
1.11 Suggested readings

1.0 OBJECTIVES
After going through this lesson, the learners will be able to
•

Know

the

meaning

and

acquisition.

1

advantages

of

merger

and

•

Understand the financial evaluation of a merger and acquisition. •

Elaborate

the

financing

techniques

of

merger

and

acquisition.
•

Understand regulations and SEBI guidelines regarding merger and acquisition.

1.1 INTRODUCTION
Wealth maximisation is the main objective of financial management and growth is essential for increasing the wealth of equity shareholders.
The growth can be achieved through expanding its existing markets or entering in new markets. A company can expand/diversify its business internally or externally which can also be known as internal growth and external growth. Internal growth requires that the company increase its operating facilities i.e. marketing, human resources, manufacturing, research, IT etc. which requires huge amount of funds. Besides a huge amount of funds, internal growth also require time. Thus, lack of