TRADITIONAL MERGERS & ACQUISITIONS: CAN YOUTHS BE BENEFITED?

NOT JUST A RECIPE, LIMITED TO BIGGER COMPANIES

Mergers & Acquisitions often relate to something which is only for major corporations in order to consolidate and further strengthen merged resources while bringing costs down significantly. Regulators such as central banks have used this tool to consolidate inadequately capitalized investment banks, commercial banks, mutual funds etc., which should not have been licences in the first place

Likewise pharmaceutical giants such as Sanofi & Aventis, automobile companies such as Mercedes & Chrysler teamed up few years ago along with other major corporations who opted to join hands with other market leaders rather than waste money on competition to gain bigger market share. Recently we have also witnessed major service providers such as Travelers Group & Citi Corp, then we have AOL & Time Warner. List of all major M&As can be seen on the right end of this blog

Post merger scenarios are not much difficult to forecast in bigger companies as they have ready markets, presold brands, deep pockets, access to strong market makers etc., which usually give them the leverage to come out much stronger while taking advantage of combined power of the merged entity. So everyone gets a portion of the bigger pie, including the small shareholder who sees growth in his value of shares as well as better dividend payouts

Having seen the better side of mergers, there is an equally challenging side which no one denies, that is the list of liabilities, claims, litigations, stuckup inventories etc., which experts may agree to overlook at the time of setting a fair price tag to the merged business in anticipation of handling such isseues without much of a problem

Lets now try to visualize a situation if we try to use only MERGERS in development of Youth Business for following reasons, assuming we team up 100 Youths in one project

a) per youth Investment of $5,000 doesn’t look adequate to gain much mileage in respect of getting factory supplies, no chance of getting price benefits, inconsistent supply chain, costly logistics, high selling costs etc., BUT when we multiply this with 100 youths coming in with more or less the same seed capital, this group stands at half a million dollars worth of seed capital, which would end up being a lot more potent, besides getting a team of 100 heads & 200 hands to work and push through for common goals & dreams – this scenario can make more business sense if banks could come in and offer low cost trade finance so the equity side gets complimented with equal amount or more in bank support – certainly food for thought

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