Vocabulary notes

upbeat – (зд) оптимистический взгляд

faint-hearted – малодушный, слабонервный

transparency – прозрачность, открытость

predictability – предсказуемость

outdated – устарелый

impediment – препятствие

pace – темп

staggering – ошеломляющий

piece of legislation – законопроект

emerge – появляться, возникать

stake – заинтересованность

Chamber of Commerce – торговая палата

Text 3 mergers and acquisitions

Regardless of what form a business takes – sole proprietorship, partnership, or corporation – the chances are reasonably good that its form will evolve over time. This evolution may involve acquiring new businesses, selling off old ones, or merging with existing businesses to form new companies. Almost 40 percent of the corporations listed at the start of the 1980s merged with or were acquired by other firms.

The difference between a merger and an acquisition is fairly technical, having to do with how the financial transaction is structured. Basically, in a merger, two or more companies combine to create a new company by pooling their interests. In an acquisition, one company buys another company, or parts of another company, and emerges as the controlling corporation. The acquiring company also assumes all the debts and contractual obligations of the company it acquires The flip side of an acquisition is a divestiture, in which one company sells a portion of its business to another company.

Companies have been combining in various configurations since the early days of business in the United States. Mergers tend to happen in waves, in response to changes in the economy. One of the biggest waves of merger activity occurred between 1881 and 1911, when capitalists created giant trusts, buying enough stock of competing companies in basic industries like oil and steel to control the market. These trusts were horizontal mergers, or combinations of competing companies performing the same function. The purpose of a horizontal merger is to achieve the benefits of economies of scale and to fend off competition.

A second great wave occurred in the boom decade of the 1920s. This era was marked by the emergence of vertical mergers, in which a company involved in one phase of an industry absorbs or joins a company involved in another phase of the same industry The aim of the vertical merger is often to guarantee access to supplies or to markets. For example, until recently, both Ford and General Motors owned the companies that supplied most of the parts for their cars.

A third wave of mergers occurred in the late 1960s and early 1970s. These conglomerate mergers were designed to augment a company’s growth and diversify its risks. Theoretically, when one business was down, another would be up, thus creating a balanced performance picture for the company as a whole.

In 1998 the value of U.S. mergers grew to almost twice the value of those in 1988. Stockholders in the acquired company are given shares in the acquiring company or in the new company formed by the merger.