Riqueza for Financial Consultancy conducts all studies necessary to complete mergers and acquisitions, which are considered as one of the companies' financing strategies helping to achieve sustainable development.

About Mergers and Acquisitions

Reasons for Mergers and Acquisitions

This strategy emerged as a result of the rapid changes in the global economic system represented in globalization, economic freedom, opening markets, establishing economic blocks, and increasing economic and financial problems facing developing and developed countries, which led to competition intensity between companies and increased challenges faced by many companies and institutions in the world.

Difference between Mergers and Acquisition

Despite the similarity of the mergers and acquisitions strategies in terms of the role of intermediaries and asset valuation criteria, the preparation of arrangements for determining the fate of contracts associated with those companies, and shareholders' shares. However, there are two criteria for distinguishing between mergers and acquisitions (Return - company's money)

Return: If it is granted to shareholders of the company in a form of cash (price) not shares, the process is considered an acquisition not a merger. If it is granted as a share, it is considered as a merger not an acquisition.

Company's money: If the company does not cease to exist after selling its shares to another company, this process is considered as an acquisition, but if a new company is established, the process will be a merger.

First: Merger

Merger is generally a union of interests between two or more companies resulting in the emergence of a new entity, for example the merger of the company means the total entry of its entity in another company and thus its legal entity will be canceled and will enter into the entity of the other company with which it merged, and this is different from the transformation of companies where the company remains, while its legal entity changes. The merger does not necessarily occur between companies of the same type, a company may be merged with another of different type, whether the difference is in terms of purpose or the legal entity. The merger occurs either through (consolidation), by dissolution of the company and transfer of funds to another existing company or through (Blending) that means dissolution of two or more companies and the establishment of a new company to which rights and obligations of each dissolved companies will be moved.

There are three types of merger:

Horizontal merger

It is a merger between two organizations operating the same business to achieve large business and create a competitive edge for the merged company, such as the merger of two pharmaceutical companies.

Vertical merger

It is a merger resulting from combination of institutions operating complementary businesses to achieve the modern technology businesses, avoiding certain costs, for example cost of transportation or cost of contracting. This type of merger creates integration in production, such as the merger of a quarry company with a cement factory.

Conglomerate Merger 

It is a merger between companies of different businesses, which may be for the purpose of increasing the variety of products, market geographical expansion or diversification of unrelated activities.

Second: Acquisition

Is the financial and administrative control of a company over another, through obtaining all or part of its common shares that have the voting right in the General Assembly of the acquired company whether the shares were purchased in agreement with the current management or not, because it is important that the acquired part of the acquired company allows the acquirer to dominate the acquired company.

Benefits of mergers and acquisitions 

There are many benefits that result from mergers and acquisitions of companies and economic entities, including:

* Reduction of production and service costs.

* Increase of financial capacities and efficiency.

* Improvement of quality of production and services provided.

* Increasing competitiveness.

* The ability to obtain financing from international banking institutions upon favorable terms

* The ideal solution for companies that are troubled and threatened with bankruptcy.