chapter nineteen acquisitions and mergers in financial services management

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1、ChapterNineteenAcquisitionsandMergersinFinancialServicesManagementChapterNineteenAcquisitionsandMergersinFinancialServicesManagementMotivesBehindtheRapidGrowthinBankMergersProfitPotentialRiskReductionRescueofFailingBanksTaxandMarket-PositioningMotivesCost-SavingsorEfficiencyMotiveMe

2、rgersasaDeviceforReducingMergersasaDeviceforMaximizingCompetitionManagement’sWelfareOtherMotivesMergerMotivesIdentifiedByBankExecutivesQualityofManagementProfitability(ReturnonAssets)EfficiencyofOperationsMaintenanceofMarketShareMostImportantGoalofAnyMergerTheMostImportantGoalofAnyM

3、ergerShouldBetoIncreasetheMarketValueoftheSurvivingFirm.ImpactonEarningsPerShareGenerallySpeakingShareholdersofBoththeAcquiredandAcquiringFirmWillGainIf:1.BankwithHigherP/ERatioAcquiresBankwithLowerP/ERatioAndIf:2.CombinedEarningsDoNotFallAftertheMergerMergerPremiumAMergerPremiumisP

4、aidiftheAcquiringBank’sShareholdersReceiveMoreThantheCurrentMarketPriceforTheirStockExchangeRatioTheNumberofSharesofStockOfferedByanAcquiringBankforEachShareofStockoftheAcquiredBankDilutionofOwnershipDilutionofOwnershipOccursWhentheAcquiringBankOffersanExcessiveNumberofSharestotheAc

5、quiredBankShareholders.TheEPSWillFallBelowitsOriginalLevelfortheAcquiringBankWhenThisHappens.CharacteristicsofTargetFirmtoConsiderTheBank’sHistory,OwnershipandManagementTheConditionofItsBalanceSheetTheFirm’sTrackRecordofGrowthandOperatingPerformanceTheConditionofIncomeStatementTheCo

6、nditionandProspectsoftheLocalEconomyCompetitiveStructureoftheMarketAreaOtherCharacteristicsoftheTargetFirmtoExamineTheComparativeManagementStylesoftheMergingOrganizationsThePrincipalCustomerstheTargetedBankServesCurrentPersonnelandEmployeeBenefitsCompatibilityofAccountingandManageme

7、ntInformationSystemsoftheMergingOrganizationsConditionoftheBank’sPhysicalAssetsOwnershipandEarningsDilutionBeforeandAftertheProposedMergerPurchaseofAssetsMethodofPurchasingAnotherBankAMethodofCarryingOutaMergerinWhichtheBuyingCompanyPurchasesAlloftheAssetsoftheAcquiredFirmUsingEithe

8、rCashoritsOwnStockP