Philippa+Klaes

1.) 	General information about mergers and acqusitions 1.1) Types of acquisition / Classification of mergers An acquisition, also known as a takeover, is the buying of one company (the ‘target’) by another. An acquisition may be friendly or hostile. In the former case, the companies cooperate in negotiations; in the latter case, the takeover target is unwilling to be bought or the target's board has no prior knowledge of the offer. The types of acquisitions are as follows:  Asset deals  Share deals.

In business or economics a merger is a combination of two companies into one larger company. Such actions are commonly voluntary and involve stock swap or cash payment to the target company. The classifications of mergers are as follows:  Horizontal mergers  Vertical mergers  Conglomerate mergers  Reverse mergers.

1.2.) Motives behind M & A There are many different motives behind M & A transactions. They can be subdivided in the following two categories: These motives are considered to add shareholder value:  Economies of scale  Cross selling  Taxes  Resource transfer  Increased market share.

These motives are considered to not add shareholder value  Diversification  Empire building  Manager's compensation  Vertical integration.

1.3.) Development of M & A from 2000 to present There in an increase up to 2002 followed by a sharp fall in the number of deals. This trend hasn`t been finished yet. The deal flow is down considerably in 2002 compared to 2001 and 2000, as the capital markets are demanding that deals make sense financially. Another reason M& A deals have decreased is that public companies have a much less valuable currency to purchase other companies with due to the stock market. Additionally values in the private market have decreased since the bubble period we were just in.

2.) 	Mergers and acqusitions in Germany 2.1.)The business entity as an object of sale In Germany, the acquisition of a business entity, in particular that of a corporation or partnership, is not specifically regulated by law but is governed mainly by the general provisions of the German Civil Code (BGB). Under German Civil Code, a business entity is neither a tangible nor an intangible asset. It is instead defined as an accumulation of the tangible and intangible assets, business relationships and market conditions of a business entity. Despite the lack of definition, a business entity can, however, be sold in its entirety.

2.2.)Typical steps of a business entity acquisition 1. The initial contact is the first contact between a potential vendor and a potential purchaser of a business. 2. A confidentiality agreement should prevent the prospective purchaser from disclosing the business secrets of any parties involved. 3. The purpose of the letter of intent is normally to record the results of negotiations already achieved. 4. Due diligence consists of an analysis of the target entity. 5. In order to avoid unpleasant surprises and to allocate risks all issues should be agreed contractually in a sale and purchase agreement. 6.During the completion period, the buyer and vendor will implement the measures necessary to complete the transaction.

2.3.) Antitrust law European Union legislation is based on the underlying belief that competition is vital and should not be restricted. To this end, merger rules have been enacted both at European and Member State level to ensure the competition within the EU market is not hindered. 3.) Outlook: Global development of M & A In many areas of technology there will eventually be a few really big winners. Midsize companies will have a difficult time competing. That is, there will be either more monopolies like Microsoft or oligolopolies with a few big players.