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2. Types of Business Combinations

2. Types of Business Combinations. A business combination may take 3 different forms. What are they?. 2.a Acquiree Liquidates. In the first type of business combination, The acquiree liquidates; and The acquirer takes control of all its net assets

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2. Types of Business Combinations

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  1. 2. Types of Business Combinations • A business combination may take 3 different forms. What are they?

  2. 2.a Acquiree Liquidates • In the first type of business combination, • The acquiree liquidates; and • The acquirer takes control of all its net assets • Once the acquiree liquidates, it ceases to exist. • All of its net assets are taken-over by the acquirer and absorbed into its own business.

  3. 2.b Acquiree does not liquidate • In the second type of business combination, • The acquirer takes control of the acquiree’s net assets • The acquiree does not liquidate. • It continues to operate, holding shares received from the acquirer. These 2 types of combinations are known as acquisitions. We will learn more about acquisitions in the next module

  4. 2.c Merger • There is a third type of business combination, involving 2 businesses, where • both businesses liquidate; and • An entirely new entity is formed. This type of combination is known as a merger.

  5. Quiz Question • In 2004, 2 large furniture retailers in Fiji merged. Click on the mouse to find out Who were they? Courts & Homecentres Now known as Courts Homecentres (“Together we’re better”)

  6. 2.Types of Business Combinations Type 1 and 2 are are both ACQUISITIONS In Type 3, A and B have MERGED End this lesson

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