Corporate group

Business connection or business combination referred to the contracted close cooperation of various companies (cooperation ) and the economic and legal unification of different companies to a larger economic unit (concentration, see corporate concentration ). It is not mandatory that the autonomy of the individual companies will be terminated in the field of economic decisions. Corporate connections are performed from different considerations, but ultimately the intention is the cause to be economically better positioned.

  • 2.1 General Objectives
  • 2.2 Objectives for individual divisions 2.2.1 procurement
  • 2.2.2 production
  • 2.2.3 Funding
  • 2.2.4 paragraph
  • 3.1 consortium
  • 3.2 cartel
  • 3.3 syndicate
  • 3.4 Joint Venture
  • 3.5 Strategic Alliance
  • 3.6 Trust
  • 3.7 Interest Group
  • 3.8 Group

Molding

Cooperation

Cooperation refers to the voluntary cooperation between different companies for the joint implementation of large projects or for the enforcement of common interests against third parties, for example in the form of a strategic alliance. The characteristics of the cooperation are to a business cooperation through coordination of functions or outsource functions and transfer of decision-making at an EU entity ( for example in the form of a general partnership - OHG ). On the other hand, the affiliates must retain their legal independence and their economic independence in the areas that are not subject to the cooperation agreement.

Is the cooperation with competition restrictions associated with about price fixing, divisions of markets, competition clauses, supply or purchase obligations to o measure similar as is the cooperation at national or European competition law, in particular the prohibition of cartels.

Concentration

The concentration ( concentration of companies, more precisely, company concentration ), however, describes the combination of entities under task their economic independence. However, the legal independence remains. The main feature of enterprise concentrations is the subordination of the combined companies under a common management. The merger does not necessarily vonstattengehen voluntary. This is done either through the acquisition of a majority stake by the dominant undertaking or by the conclusion of a domination agreement. Enter the company in the merger and their legal independence, it is called a merger. A merger occurs whenever either a company is incorporated through inclusion in an existing business or new formation in which two companies A and B form a new company C (see also fusion ).

The concentration of companies in legal terms is basically a merger represents, which, if it reaches a certain magnitude or exceeds the national or European merger control subject.

The economic development towards globalized markets and the increasing mechanization and automation of production and sales processes, as well as the assurance of raw materials and energy resources, and more and more lavish expectant research and development projects lead to increased concentration trends in larger companies. This small and medium-sized enterprises are forced to co-operation in order to survive in the market. This reflects the tendency of the free market economy in gradual self-destruction through the lifting of free competition on the basis of cooperation and concentration of efforts of the company.

A combination of dependent companies is not a merger. Therefore, the combination of two companies whose shares are held in each case a majority of the same parent company, an irrelevant from the point of the merger intercompany connection.

Objectives

General Objectives

The main objective of a business combination is, in the long term to maximize profits. The steps to this goal are:

  • Growth: An Internal or organic growth is achieved only in the new, prosperous markets quickly with little competition. An external growth is possible through a corporate connection. Frequently, a company is acquired by another (see, for example, Daimler -Benz AG and Chrysler Corporation or, as an example of a hostile takeover, Vodafone and Mannesmann ).
  • Increased efficiency: this, the synergy effect is often cited. By reducing or by merging duplicate departments after the merger - such as the Financial Accounting or Human Resources - economies of scale are achieved. The replacement of existing in the company know-how to bring increases in efficiency.
  • Reducing the risk: By dividing the risk to several partners in cooperation and through diversification into new products and markets in the concentration of the risk for the combined individual companies should be lower.

Targets for individual business units

Procurement

By common occurrence in the procurement market can improve the bargaining position with strong suppliers be achieved. More favorable conditions ( terms of delivery, payment terms ) and - by correspondingly larger purchase quantities - effective procurement prices can be enforced. Above all trading companies have come together to form purchasing cooperatives. In industrial enterprises is primarily the risk reduction in the supply of raw materials, both quantitatively and qualitatively, in the foreground. Here connections with companies in the upstream production stage (raw material extraction operations ) are received.

Production

The aim is to optimize the improvement of production processes in terms of quantity, quality, time and place. Further savings can be achieved in process engineering by classification and standardization.

Financing

The high financial burden, especially for large projects, a single company can not carry alone mostly. Therefore, companies go into cooperation agreements with each other in order to carry out such projects but can. The merger to form an association or a project -Holding to expand the financing options and spread the risk over several partners.

The merger may be financed through existing equity capital, debt financing ( bank loans), equity financing, treasury shares or a share capital increase.

Paragraph

Have mergers in this area as a motif in particular the expansion of market outlets through a joint sales organization. Through coordination of markets and marketing activities of the distribution of products is rationalized. Another consequence of the merger is the extension of the marketing program (creation of cross-selling potentials ). This has an effect of risk mitigation, as this sales opportunities are hedged. Risk spreading is done by diversification. Possibly. allows the newfound size and the development of foreign markets.

Forms of business connections

Consortium

Consortia are corporate relationships on a contractual basis for the settlement of well-defined tasks. After performing these tasks, they dissolve again. As a society form normally in the form of civil law ( GbR ) is selected. The most frequently encountered are banking syndicates, which are formed for the purpose of issuance of securities or shares or for the award of larger loans. In industry consortia are formed mainly in order to carry out large-scale projects. Like any other cooperation can also syndicate the ban on cartels fall as far as it is connected with restrictions on competition.

Cartel

Cartels are collaborations between companies on the basis of agreements between undertakings, concerted practices and decisions by associations of undertakings, which are regularly discussed with the aim of restricting competition, as between the partners, stakeholders or in relation to third parties. The legal and organizational independence is maintained externally. Is the cooperation with competition restrictions connected, it shall be subject to the antitrust laws, possibly the cartel prohibition.

Syndicate

The Syndicate is the strictest form of a cartel. The economic and legal independence is abandoned by the parties partially. Core functions such as sales or procurement will be transferred to an independent trading company. Syndicates are generally prohibited in Germany.

Joint Venture

Joint venture (joint ventures, German " shared adventure " better " joint venture " ) are of two or more companies jointly supported corporative structures which are in any way connected with the management of the parent company. In this form of enterprise contact individual corporate activities are linked not only organizationally, but also the necessary resources to the jointly founded company introduced. Joint ventures are often formed to build in new foothold esp. foreign markets or to set up production there. Here, a company similar to the German GmbH is often founded with a local company. In the new company, the holdings of intangible assets can, such as licenses, rights, customer base, etc., or incorporated in the form of real estate, manufacturing or finance. Often, the proportions of the two (or more) partners are equal, that is, in equal parts.

Strategic Alliance

A strategic alliance is a formal relationship between two or more companies to achieve one or more common objectives. The companies remain legally independent within the framework of a strategic alliance.

Companies support the strategic alliance with different resources such as financial capital, factors of production, products, knowledge or expertise. Here is hoped that cooperation benefits of the strategic alliance outweigh the individual efforts of a single company.

Trust

A trust (full name in English: trust company ) is a contractually agreed merger of several companies. Goals may be to eliminate competition, to make a market or a production monopoly or fix prices.

Most of the legal and economic independence is given up by the companies that is then up to the managing trustees of the holding company, but not participate in the profits of the holding company. Trusts have similar objectives as corporations, but these can pursue efficient, since the subordinate enterprises have become completely dependent ( " set are ").

A trust can arise in two ways. Firstly, by taking up a company (A B buys ) or by formation (A and B set C, A and B do not exist). So Trusts are the result of mergers.

Community of interest

Business combination to achieve a common economic purpose. These associations usually have the legal form of a civil law partnership ( GbR ) or a registered association (eV ). It is often the precursor of a merger. The companies remain legally independent, unless this is mitigated by contract.

Group

According to § 18 German Stock Corporation Act (AktG ) form a dominant and one or more controlled companies consolidated. The individual companies shall be deemed to Group companies. The legal independence of the dependent company remains still exist, but they lose their economic independence. In Germany, around 90 % of public companies and 50 % of those societies are organized in groups and group- like structures.

In Group Two basic types are distinguished. The organized group is equality before the company without over-or subordination. One then speaks of sister companies. When subordination Group speaks against you by a parent company and a subsidiary.

Classification

Mergers can be divided as follows:

  • Mergers on a contractual basis:
  • Mergers with capital investments:

Alternatively, mergers are also classified based on the production levels of the companies involved:

  • Horizontal mergers between firms at the same stage of production instead of, for example, several coal mines or association of automobile manufacturers. Advantage / reason: cost savings, costs of scale, use of synergies.
  • Vertical mergers take place between various ( upstream and downstream ) stages of production take place, such as a coal mine joins forces with a steel plant, the coal refers (suppliers principle, advantage / reason: cost savings in procurement, securing sales )
  • Diagonal or inorganic or lateral mergers take place between companies of different production stages and industries, creating a conglomerate produced (eg Oetker Group: food, banks, shipping companies, hotels, food trade; advantage / reason: risk diversification )

Risk of market dominance

Through mergers is usually sought by the parties dominance, but with the danger of oligopoly and monopolistic increased ( relative concentration or centralization of capital).

A dominant position is presumed in accordance with German law, if a company has a market share of more than one -third. In this case, the Cartel prevent a merger, if the respective company can not demonstrate an improvement of competition through their merger.

In Marxism, it is assumed that over time more and more companies merge or are taken over the world ( Hostile Takeover ). Finally, these acquisitions would lead to a single global " world company " who takes necessarily a dominant position. This condition would not have been on time prevent them from competition authorities, because it is a logical imperative arises from the competition. The removal form the various undertakings into a single global group would thus eventually lead to the market economy transforms itself constantly in a planned economy.

Proposed facts

→ Main article: merger control

The " merger " is defined and substantiated in both the European and the national law, usually by merger facts:

In Germany, the merger is subject to § § 35 et seq of the Act against Restraints of Competition (GWB ) containing corresponding combination facts. After that is a union

  • The acquisition of the assets of another company ( including mergers), in whole or in part,
  • The acquisition of control of another company,
  • The acquisition of at least 25 % of the capital or voting rights of another company ( including the creation of a joint venture ) and
  • The acquisition of other competitively significant influence on another company.

In European law, the merger control by the so-called Merger Regulation VO 139/2004/EG is ( previously Reg 4064/89/EWG ) regulated. Again, combination facts available. Then there is a merger, if

  • Two or more previously independent undertakings merge, or
  • One or more companies through the purchase of securities or assets, by contract or by any other means, direct or indirect control of the whole or parts of one or more other undertakings ( including the creation of a ( full function ) joint venture).

The merger by purchasing the assets of another entity is commonly referred to as asset deal, the merger by acquisition of shares or voting rights as a share deal.

The control of another undertaking within the meaning of both the German and European competition law acquires the transferee, for example, the fact that he acquires ownership of real estate, equipment, intellectual property rights or other assets of the target company, or the fact that he gained the ability to to take the composition of the decision-making bodies of the target company and / or decision-making in influence, or even the fact that personal connections are made with the target company.

Share (finance) Trust (business) Centralisation
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