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Parenting theory.

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Introduction

Parenting theory From Harvard University Express. http://www.google.com.au/search?q=cache:annYRlB09n4J:www.fihrd.or.th/lf1999/panel1.html+%22what+is+a+good+society%22+%2B+%22good+society+is%22%22&hl=en&ie=UTF-8 Parent org is an intermediary between investors and businesses. Parenting org will try to answer 2 question: which business should we own? What parenting approach will get the best performance from those busineses? Instead of looking at how businesses relate to one another, a parent organization should look at how well its skill fit its businesses' needs and whether owning them creates or destroy value. Parenting theory suggest that most CEO should concern with two crucial questions: what business should this company, rather than rival, own and why? And What org structure. Management process and philosophy will foster superior performance from its businesses? The best parent companies create more value in their businesses than rivals would. Multi business bring together under a parent org businesses that could potentially be independent. Such parent company can justify themselves economically only of their influence creates value. For example: The parent org can improve business' plan and budget , promote better linkages among them, provide especially competent central function or make wise choices in its own acquisitions , divestment and new ventures. ...read more.

Middle

In both cases, Lloyds TSB was able to sell those products to its dramatically larger retail customer base, thus generating more revenue than the three entities could have done individually. Similarly, having acquired Duracell for a 20% premium, Gillette was confirmed in its expectation that selling Duracell batteries through Gillette's existing channels for personal care products would increase sales, particularly internationally. Gillette sold Duracell products in 25 new markets in the first year after the acquisition and substantially increased sales in established international markets. In other instances, a target company's distribution channel can be used to escalate the sales of the acquiring company's product. That occurred at Gillette when it acquired Parker Pen. In calculating what it could pay, Gillette estimated that it would be able to get an additional $25 million in sales for its own Waterman pens by taking advantage of Parker's distribution channels. A final kind of revenue enhancement occurs when the bigger, post-acquisition company gains sufficient critical mass to attract revenue neither company would have been able to realize alone. Consider what happened when ABN and AMRO merged to form ABN AMRO, the large Dutch bank. ...read more.

Conclusion

When the Credit Suisse Group merged with Winterthur, 10% of the forecasted synergies came from reducing funding costs through optimized capital management. Here's another genuine financial-engineering synergy: a transaction may allow a company to refinance the target's debt at the acquirer's more favourable borrowing rate without affecting the acquirer's credit rating. That is especially likely to happen in the financial services sector because those companies are big and their risk is diversified. TAX BENEFITS Tax considerations are often a barrier that must be overcome to justify a deal, a fact that makes tax-related synergies very difficult to assess. It's useful to distinguish between tax "structuring," which makes the deal possible, and tax "engineering" (also called tax planning), which ensures that the overall tax rate of the combined company is equal to or lower than the blended tax rates of the two companies before the deal. Regulators often believe that companies using perfectly legitimate structuring and engineering techniques to avoid incurring additional costs are simply taking advantage of loopholes. Thus companies are not anxious to disclose any clever techniques they may have used. The goal of tax structuring is to avoid as many onetime tax costs as possible. Those costs may include capital and transfer duties, as well as change-of-ownership provisions that can trigger capital gains or prevent tax losses from being carried forward. ...read more.

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