Under merger is corporate connection understood by at least two previously legally independent companies to economic and legal unit, wherein at least one of the company rises to the other and thereby loses its legal independence. The merger is thus a form of corporate takeover in which the purchase price for the acquired company is paid in shares of the acquiring company. In German law, a merger takes place as a merger under the Transformation Act .
Concept of merger
Fusion ( english merger ) originally referred only to the legal situation of a merger of two companies; in today's parlance but the term fusion often one refers to any combination of at least two companies, regardless of the legal form, in the way of company acquisition (originally acquisition , English acquisition ). Therefore, also in the German-speaking countries the English name has Mergers & Acquisitions ( German , mergers and acquisitions' ), but above all its abbreviated M & A naturalized as a generic term for corporate takeovers.
In the event of a merger, the entire assets ( assets and liabilities ) of the acquired company are transferred to the acquiring company ( No. 1 UmwG ); the shareholders of the acquired company receive shares in the acquiring company. For the shareholder of an acquired company, the effect of the merger is similar to a company sale with payment in shares of the acquiring company ( share swap ); In contrast to the merger, the acquired company will continue to exist in the event of a sale (henceforth as the buyer's daughter), whereas in the event of a merger it would lose its independence.
If the acquiring company and the acquired company are roughly the same size, their merger is a merger of equals , otherwise one speaks of a merger of unequals .
In the case of a merger through absorption , the acquiring company takes on the assets and debts of the target company, which loses its existence ( ); it works in the acquiring company. The merger by formation of a new company leads to the merger of two companies and the subsequent establishment of a new company ( ); In the new company, the assets and debts of the predecessor companies are mutually consolidated.
In addition to these mergers with target companies outside an acquiring group, there are also mergers within a group. An upstream merger is the merger of a subsidiary with its parent company , whereby the latter is retained during the course of the transaction , while downstream merger is the opposite. The merger of sister companies within a group is the sidestep merger .
In addition, a distinction can be made according to whether the merging companies belong to the same industry or not:
- Horizontal merger : The companies belong to the same branch of industry or the same processing level or trade level or have identical or similar suppliers or customers .
- Vertical merger : although the companies are in the same industry, they belong to different levels of processing or trading.
- Marketing: different processing or trading levels, same or similar clientele;
- Technology: same or similar processing or trading levels, different customer base;
- Pure conglomerate: both the processing or trading levels and the customer groups are different.
A distinction can also be made between national and international mergers.
The ideally realizable motives for a merger can be strategic, financial and personal in nature:
- Strategic motives:
- Market motives : the merger enables improved access to procurement and sales markets and / or weakens or eliminates competition. There is greater bargaining power with suppliers , customers and banks .
- Achievement motives : improved use of operational functions in procurement , production , sales or marketing is possible.
- Risk motive : there is an improvement in risk through risk diversification , risk reduction or risk compensation through synergies . It also enables an increase in market shares and increased market power . Increasing company sizes also minimize the risk that the investor himself becomes a takeover candidate. The exploitation of the law of mass production through economies of scale or lower market entry costs can bring about a reduction of the total costs.
- Financial motives:
- Capital market-related motives : a company size leading to capital market viability is achieved, economies of scale and economies of scale arise . These lead to a reduction in equity and debt capital costs , fixed costs and contribute to increasing profits / reducing losses.
- Tax motives : consist mainly of the use of acquired tax loss carryforwards . They cause a reduction in the corporate tax burden and thus the tax rate .
- Personal motives are often not based on business reasons, but result from personal, irrational or subjective considerations.
- Hubris hypothesis : It assumes that management's overestimation of oneself leads to mergers. It is assumed that a purchase price that is above the market price is paid because the company willing to buy believes that it has a better market assessment than the market.
- Managerialism hypothesis : If the company willing to buy has inefficient incentive and reward systems, these can only be put into perspective through external growth.
- Free cash flow hypothesis : It assumes that mergers create additional promotion and incentive potential for management by increasing resources.
- Diversification hypothesis : It assumes that mergers reduce the likelihood of insolvency of the company willing to buy and thus secure the income of the managers in the future.
Mergers affect corporate, merger and antitrust law issues .
The Directive 90/434 / EEC (the Merger Directive) regulates and standardizes since July 1990, the company law and tax treatment of cross-border takeovers in the EU, the European Merger Directive regulates since November 2005, cross-border mergers of limited liability.
The German Transformation Act (UmwG) knows the merger by incorporation ( No. 1 UmwG; English merger ) and the merger by establishment (§ 2 No. 2 UmwG; English amalgamation ) and allows certain legal forms to be merged ( Paragraph 1 and 2 UmwG). The provision of Section 311b (2) BGB does not apply to the merger agreement to be notarized ( (1) UmwG), the content of which is specified in (1) UmwG. The law grants the affected creditors creditor protection if their claims are jeopardized ( (1) UmwG). Personally liable partners of the target company are liable for the debts incurred before the merger for another five years as part of the grandfathering ( (1) UmwG), provided the investor is a corporation .
In addition, antitrust issues must be checked regularly , in particular whether the acquisition of a company is subject to an obligation to register and notify the Federal Cartel Office or the European antitrust authority ( merger control according to (1) GWB ). Antitrust law does not know the term merger, but speaks of a merger. Antitrust issues arise in particular when a merger leads to a dominant position in the market .
In Switzerland , the merger of corporations, general and limited partnerships, cooperatives, associations, foundations and sole proprietorships is regulated in the Merger Act (FusG), which came into force on July 1, 2004. According to Para. 1 FusG, companies can merge by either one taking over the other ( absorption merger ) or they merge to form a new company ( combination merger ).
- Association for Corporate Growth (Austria)
- Federal Association of Mergers & Acquisitions e. V. (Germany)
- Basic rules for successful takeovers
- Acquisitions in the software industry
- Norbert Fischer, corporate mergers , in: Fritz Neske / Markus Wiener (eds.), Management-Lexikon, Volume IV, 1985, p. 1533.
- analog Christian Wilplinger, corporate acquisitions and sales tax optimally designed , 2007 f p. 6
- Bernd W. Wirtz, Mergers & Acquisitions , 2003, p. 69 ff.