Transformations  in
Business & Economics

The Benefit of Business Combinations
Žaneta Simanavičienė, Lina Dagilienė

ABSTRACT. A business combination is a recent phenomenon because of complicated and variable business conditions. Companies enter into various types of arrangements that may have at least some of the characteristic of a business combination. The paper reviews reasons for combining companies according to different literature sources. Among most often reasons are: economic accelerated growth, diversification, tax advantages, prestige, and economies of scale. It is very important to evaluate strategic and organizational attributes of combining companies, especially in developing countries. Strategic attributes contain technology capability, foreign market power, and international marketing expertise. Organizational attributes are managerial skills, international experience, and organizational reputation. The economic gain from merging and costs are also discussed. There are three legal forms of business combinations: a statutory merger, a statutory consolidation and stock acquisition. It is essential to select a correct form of combination.

KEYWORDS: business combination, merger, strategic attributes, organizational attribute, statutory merger, statutory consolidation, stock acquisition.