Expansion and Merger Research Paper Example | Topics and Well Written Essays - 1500 words

Expansion and Merger - Research Paper ExampleThe laws relating to nuclear fusion reaction as embodied in sections 391 to 396 of the companies Act, 1956 enable the regimen to oversee if the companies in need of merger follow procedures and requirements necessary for merger as consideration of the court of justice (Wilson, 2011). Another reason why the government need to regulate market during a merger is because, it is the governments duty to oversee whether the management of the engineer merging firm can secure itself form hostile and harsh takeover through a number of various financial as closely as legal defenses. The need for government regulation in this case serves as a law that tends to be deferential to defenses for as long as the bespeak the target ships company does not act primarily to preserve its own position. The government becomes skeptical during a merger since the management of a target company subject for acquisition may negatively affect the society if employ ees of this company lose their jobs as this increase the percentage of the unemployed in a country. In the United States, the rationale for government intervention is gartering in assessing those mergers based on hubris and power without accounting for consequences involved (Burge, 2008). Consequently, the government is now able, with the help of defense laws, to facilitate majority of mergers rendering transactions friendly and negotiable. Hence, preserving and accounting for interests of parties involved by following the rule of law to the latter. Furthermore, the government intervention in the market process remains justified since it ensures that the combined size of the new corporation cannot monopolize power rendering the merger unlawful. Another rationale for government market intervention is that it regulates purchasing power of companies. In this situation, the law offers tender protocols that require whoever is purchasing anything beyond 5 percent of companys shares to d ivulge him or herself, make particular public disclosures, and announce the reason for the share purchase and any terms and conditions of the tender offer. When companies decide to work on self-expansion, complexities regarding things exchangeable outstanding arise. Subsequently, business expansion or growth is a stage in the life of a company that is fraught with not only opportunities, only when also perils. In addition, business expansion carries with it a corresponding increase in financial fortunes for owners and employees as well. When intended companies fail to merger due to inescapable circumstances and at the same time decide on expanding on its own, it requires additional financing. Getting the extra capital for expansion may prove to be a hard task since small businesses planning to expand encounter drawbacks that make them vulnerable to market strategies that renders small businesses inadequate for advantageous terms functional in the capita market. Another complexit y associated with capital projects that is likely to rise is unbalanced sales revenue. In some businesses, stakeholders expect to see growth in hold dear of companys stock. Nevertheless, due to unpredicted downward growth in the trend market share, amount of revenue obtained from sales deteriorate causing the company to face difficulties while in its plans of expansion. Additionally, at times of expansion, companies face more complexities pertaining to capital projects, as the firm requires more room for expansion. Raising extra capital to buy land for firm