Reasons for Take over
Reasons for take over include
economies of scale, Risk diversification, Asset acquisition or backing,
improved earning
1.
Economies of Scale
First reason for take over may be
the economies of scale. Many costs may be reduced by extending the operations.
2.
Risk Management
Second reason of takeover may be the
risk management through diversification approach.
3.
Asset Acquisition
Third reason of takeover may be improved
the asset side of balance sheet. It means that a company may be earning high,
but does not have sufficient asset or matching asset.
4.
Improve Earning
One of the main reasons of takeover
may be improve the earning of the organization.
5.
Tax Saving
Reason of takeover may be the tax saving.
For example a tax may be avoided by acquiring loss making company.
6.
Management acquisition
The reason of takeover may be acquiring
the competent management of a smart company.
7.
Remove Competition
Reasons of takeover include the
removal of competition; the competition is removed to ensure long term stability
and profitability of the organization.
