Google Groupon
The world of big business is often filled with takeovers, mergers and acquisitions. These types of transactions are often very impactful and can send serious changes across the financial landscape. It is therefore very important to students of financial and economic systems to investigate and measure the utility of these types of trades. The purpose of this essay is to examine an specific example where a potential merger is investigated to achieve this objective. In this case, this essay will argue the recent rumors of Google acquiring Groupon and the ramifications of this event. The essay will attempt to answer if this potential acquisition would add value to the shareholders of each corporation in order to make an executive decision as whether or not to recommend such a transaction.
Mergers and Acquisitions
Benefits of Mergers and Acquisitions are the main reasons for which the companies come into these deals. Mergers and Acquisitions have the ability to produce significant tax gains, can increase revenue and can reduce the cost of capital. Mergers and Acquisitions can also turno out to be truly valuable to the companies when they are experiencing hard financial times. If the company which is suffering from various problems in the market and is not able to overcome the difficulties, it can look for an acquisition deal to improve its competitive advantage. If a company, which has a strong market presence, buys out the weak firm, then a more competitive and cost efficient company can be generated by this transaction. In this case, the target company benefits as it finds its way out of the difficult situation and after being acquired by the large firm, the joint company accumulates larger market share. This is due largely to these benefits that the small and less powerful firms agree to be acquired by the large firms.
These types of transactions and dealings will often lead to an increased value generation for the company....
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NPV Obviously the easiest and most error-free way of doing this is in Excel. Thus, we get the following table for the NPV calculation. Flow NPV (1-5) $2,031,369.67 Total NPV $281,369.67 Google should accept the project, because it has a positive net present value. All projects with a positive net present value add to shareholder wealth. Unless there is a comparison between two mutually exclusive projects, any project with a positive NPV should be accepted. In Google's
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