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How do accounting, tax and legal factors affect an M&A strategy?

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How does the following effect mergers and acquisitions
o Accounting: Revenue enhancement, cost reduction, and risk management
o Taxes: Shields, synergies, and the weighted average cost of capital
o Legal: Corporate organization and ownership, litigation risk, and legal compliance

Select at least two effects from each category and explain their relevance in pursuing an M&A strategy.

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Effects of Different factor on Merger & Acquisition Strategy

Merger & Acquisition is an important part of the corporate finance. It is combining of two or more entities into one through a purchase acquisition but it is different from consolidation (Dounis, 2008). The process of merger & acquisition includes various strategies that are extremely important in order to derive the maximum benefit from merger & acquisition deal. Some of the factors such as accounting, taxation, and legal factor affect the merger & acquisition strategy in different ways.
Relevance of accounting effects in Merge & Acquisition Strategy
Accounting is an important factor that has relevance in pursuing merger & acquisition strategy. It is because; the main aim of merger & acquisition is to get the financial gain and benefits. Some of accounting effects such as revenue enhancement, cost reduction, and risk management are important in merger & acquisition. Relevance of these effects in pursuing mergers and acquisitions are as follow -
Revenue Enhancement:
Revenue enhancement is a gain or benefit from the merger & acquisition in terms of increasing the revenues of a firm through market gain, increase in market power, and strategic benefits. It has important relevance in pursuing merger & acquisition strategy as the main aim of a firm is to increase its revenues by acquiring or merged with another firm (Hunt, 2009). So, every firm that pursues merger & acquisition strategy considers the revenue enhancement factor.
Risk Management:
Risk management is important and relevant in pursuing the strategy of merger & acquisition. The success or failure of merger & acquisition also depends upon the effective risk management within the businesses. Higher failure rate of merger & acquisition strategies ...

Solution Summary

This essay-style solution discusses revenue enhancement, risk management, tax synergies and weighted average cost of capital as well as litigation risk and legal compliance. This solution is approximately 1000 words with five APA references and in-text citations.

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Mergers and Acquisitions: accounting, taxes, legal and their relevance

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Analyze the effects of the following on M&A activities:
1) Accounting (revenue enhancement, cost reduction, risk management
2) Taxes (shields, synergies, WACC)
3) Legal (corporate organization and ownership, litigation risk, law compliance)
4) Select at least two effects from each category and explain it's relevance in pursuing an M&A strategy.

Based on research of the subject matter, prepare a concise yet detailed outline including introduction, body (corresponding to the topics below), conclusion and references (last section of outline). The outline must include properly formatted APA citations and references. Length should be sufficient to cover the subject matter.

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