Monday, January 3, 2011

Merger

The term merger refers to a combination of two entities. The term is most often applied to when two companies agree to merge their operations into a single combined entity, this may be for reasons such as increasing the scale of the operation to spread some of the fixed costs, combining businesses that are in the same value chain e.g. a manufacturer and a distributor, leveraging the capabilities or technology of one of the businesses, etc. Mergers may occur between fund management businesses, this may have some impact on your investment, but usually a lot of planning and careful management goes in to ensure the merger and integration runs smoothly for clients. Funds themselves may also be merged, e.g. two funds with the same or similar investment objectives may be merged in order to reduce compliance work and to cut the two sets of fixed costs down to one.

Synonyms: Mergers and Acquisitions, Takeover, Acquisition, Transaction, Corporate action

Comments?
If you have any further questions or would like to add to this fund management term, then please submit your thoughts below.

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