Aberdeen Lyle Merger Analysis
Large mergers, acquisitions and some other corporate combinations require prior review and approval in some jurisdictions. As part of their review, competition authorities may prohibit mergers or approve them subject to conditions. Mergers are usually only prohibited or subjected to conditions if the authority concludes that the merger will substantially harm competition. Given the discretion inherent in the interpretation of this threshold, various competition authorities have published merger guidelines. These are intended to assist firms and their advisers to anticipate the procedures and criteria which will be applied in assessing a merger. Taken from Aberdeen Lyle New York

An example of such guidelines is contained in the Horizontal Merger Guidelines published in 1997 by the US Department of Justice and the Federal Trade Commission. The Guidelines set out a five stage analysis of the following subject areas. Learn more about proper investment techniques at Aberdeen Lyle Group, New York NY.

1. Market definition

2. Identification of firms participating in the relevant market and their market shares

3. Identification of potential adverse effects of the merger

4. Analysis of barriers to market entry

5. Evaluation of any efficiencies arising from the merger

The importance of market definition was discussed earlier in this Chapter. In the context of a merger review, market definition is often the key factor in determining whether a merger is anti-competitive. If a market is defined broadly, the merging firms may be considered to be competitors. Amore narrow market definition may result in a determination that the firms operate in different markets. On the other hand, a broad market definition could lead to a conclusion that the merged entity will face sufficient competition from other firms in the market. A narrow definition could lead to a conclusion that the merged entity would have excessive market power in a smaller market.

The second stage of the analysis is the identification of firm competing in the relevant market and their market shares. The determination of market share will have a direct bearing on an assessment of market power and the potential for abuse of market power by the merged entity.The evaluation of market participants includes not only firms which actually participate in the relevant market, but also firms which could be expanded to enter it.

In assessing the potential adverse effects of a proposed merger, attention will typically focus on the establishment or increase of the dominant position by the merged entity. There may also be concerns that the merger, by reducing the number of firms participating in a market, will create conditions which make anti-competitive agreements among them more likely.

The evaluation of barriers to entry is an important aspect of merger review. A finding that there are low barriers to entry can help justify a merger.

Finally, the five-stage analysis concludes with an assessment of any efficiencies to be realized as a result of the merger. In this stage, the objective is to assess efficiency or other welfare gains which can be projected to result from the merger. These will be balanced against any anti-competitive effects which have been identified in the earlier stages of the review.

Theoretically, substantial efficiency gains or other public welfare gains could support approval of a merger even where anti-competitive risks are identified. IN practice, it is difficult for a competition authority to qualify the positive and negative aspects of the transaction and arrive at any verifiable net effect. It may also prove difficult to determine how any efficiency or other welfare gains will be distributed between the producing firm and its customers. Similarly difficult is the development of any means to ensure redistribution of efficiency gains to broader public advantage.

Aberdeen Lyle Group New York : A very high-return strategy for those willing to accept greater levels of downside risk. This strategy invests in leveraged index funds during strong bull markets -- and strong bear markets -- to magnify returns. (Alternatively, an investor may use margin to create leveraged positions in Exchange Traded Funds.) This strategy is able to leverage investments in Large Cap, Mid Cap, Small Cap and Over-the-Counter (Nasdaq) funds as well as leverage a short position with an Inverse Fund. The strategy also provides an unleveraged large cap International Fund option.