According to "Investopedia.com", Mergers, acquisitions, corporate restructuring and M&A for short– all are a big part of the corporate finance world. Every day, Wall Street investment bankers arrange M&A transactions that bring together separate companies to make larger ones. When they’re not creating big companies from smaller ones, corporate finance deals do the reverse and break up companies through spinoffs, carve-outs, or tracking stocks.
Not surprisingly, these types of actions often make the news. Deals can be worth hundreds of millions or even billions of dollars, and they can dictate the fortunes of the companies involved for years to come. For CEOs, leading M&A can represent the pinnacle of their careers. Next time you flip open the newspaperï¿½s business section, odds are good at least one headline will announce some kind of M&A transaction.
Sure, M&A deals grab headlines, but what does this all mean to investors? To answer this question, this tutorial discusses the forces that drive companies to buy or merge with others, or to split-off or sell parts of their own businesses. If you know the different ways these deals are executed, you’ll have a better idea of whether you should cheer or weep when a company you own buys or gets bought by other companies. You will also be aware of the tax consequences for the companies and investors.