Essay Strategic Corporate Finance, Mergers and acquisitions

Google Inc is one of the largest companies operating in the high tech, IT market. The company has managed to reach a tremendous success within less than a couple of decades turning from a new company operating in the new segment of the market to the leader in the high tech, IT industry. At the same time, the company has to keep progressing to maintain its competitive position in the market. In actuality, the company holds a strong position in the market, being the leader in its industry. However, in spite of the current strength of the company, Google Inc. still needs to enhance its position steadily. Otherwise, its competitors will challenge its position in the market. In such a situation, the company could use mergers and acquisitions to expand its market share and to enhance its position in the market. In this respect, it is possible to single out Yahoo Inc. as the major target company Google Inc could merge with, although AOL Inc and Move Inc. could be good options to merge with as well because the aforementioned corporations operate in the same industry and their merger with Google Inc. will make the company hardly attainable for its major rivals in the nearest future.

The target company to merge

On analyzing the position of Google Inc in the market and the position of its major rivals, it is possible to estimate that Yahoo Inc is the best choice for Google Inc to merge with. In fact, the merger of Google Inc with Yahoo Inc will put the new company not just in an advantageous position compared to other companies in the industry but almost in the monopolistic position of the new company because rivals would hardly be able to compete with the new company uniting two largest companies operating in search engines market.

At the same time, the merger with Yahoo Inc raises certain problems because it is necessary to persuade Yahoo Inc to merge with Google Inc and, what is more, the merger will need the close integration of both organizations. In this regard, the new company may face difficulties, taking into consideration the specific management style of Google Inc. In fact, Google Inc has a very democratic management style, while employees of the company possess the wide autonomy, which provides them with ample opportunities to implement their creative ideas and to stimulate the growth of the company. In this regard, the organizational culture of Yahoo Inc may be too different from that of Google and the integration of both companies may be difficult.

At this point, it is important to place emphasis on the fact that the deterioration of the organizational culture will put under a threat the further development of the new organization because the effective organizational performance is possible only on the condition of the healthy organizational culture prevailing within the organization.

Sources to finance the takeover

In addition, Google Inc may face the problem of finding sufficient financial resources to merge with Yahoo Inc. Yahoo Inc is a large company. Therefore, the merger of Google Inc with Yahoo Inc may need substantial financial resources. In fact, the financial resources available to Google Inc. at the moment may be insufficient for the successful merger with Yahoo Inc. In such a situation, the company may look for additional sources of funding, including the attraction of a strategic investor. However, the best option for the merger of Google Inc with Yahoo Inc is a bank loan because Google Inc has a relatively low level of liabilities. Hence, the company can borrow money without a risk of facing difficulties with paying off its debts. At the same time, the bank loan will allow Google Inc to raise funds for restructuring fast and to conduct restructuring in possibly shorter terms, with minimal financial losses and maximum positive effects.

Alternative target companies to merge with

In spite of positive prospects of the merger of Google Inc with Yahoo Inc, the former should still consider some alternative target companies to merge with, if the suggested merger fails. In this regard, it is possible to recommend the merger with AOL Inc, the company which offers a suit of brands and offerings for the world wide audience. This company will help Google Inc to enhance its position in the market, whereas the merger will not need as substantial funds as the merger with Yahoo Inc.

The merger with Move Inc also has a significant potential for the market expansion of Google Inc. At this point, it is important to place emphasis on the fact that Move Inc operates in the online real estate market and provides diverse services related to the search of real estate for sale or purchase. To put it in simple words, the merger of Google with Move will pave the way for Google Inc to the online real estate market. At first glance, this step is risky because the housing market is in decline now. However, it is obvious that the decline will not persist forever and sooner or later the housing market. Therefore, the company will start growing fast and the company can gain substantial benefits due to the merger with Move Inc.

Conclusion

Thus, Google Inc can enhance its position in the market through mergers. In this regard, the merger with Yahoo Inc is the most preferable for the company because it opens larger opportunities for taking the stronger position in the industry. Nevertheless, the merger with AOL Inc and especially Move Inc may be also beneficial for Google Inc for the aforementioned mergers can expand the market share and facilitate for Google Inс the process of entering new segments of the market. At the same time, the company should come prepared to raise funds to complete a merger and the use of bank loans may be helpful in this regard.