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

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Running Head: MERGER & ACQISITION

Effects of Different factor on Merger & Acquisition Strategy

Introduction
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 ...