For the complexity of a merger and acquisition process, an equally intimidating part is overcoming the countless challenges and market influences of the deal along with going ahead with it. Why is the road to acquiring another entity filled with so many blockades? Is it possible to overcome them and create successful mergers? The answer to the second question is affirmative and we have seen that over the history multiple times when corporate giants merged to form bigger consolidates and conglomerates. Why is this process then still giving tremors in the business world and the market? This issue can be addressed by answering the first question.
The first market response can be positive to mixed
When a merging or takeover news hits the public forum, the market usually takes it on a positive note. The shares of the target company start increasing to match to the share price of the acquirer if the deal price is high enough or below the market standard and also on the expectation that the acquired company will make better figures in the days to come. Price revival can also be expected due to the expectations that the company will attract rivals of the bidding company.
If the share price of the target entity trades low in the market, once the deal is finalized but before closing it, the acquired company will feel the impact, making the deal less friendly. A company announces tender to invite acquirers or mergers with the hope that its business grows and the share prices soar above, finding new grounds for expansion. When the tenders give the message that the seller is on the verge of being bankrupt or reeling under debts, the response from bidders may not change in frequency but will in offered prices.
The acquirer has its hands in full
When we look towards the market opinion of an acquirer on announcing a deal, its shares may fall in prices because of the apprehension that it is acquiring a firm in ruins and may also get dragged down. Investors of the acquirer may be divided on the stability of the deal and some will think that the offered price is too high to make a commendable profit in the new run.
Therefore, the main hurdle in front of an acquirer is to get the trust of its investors. Business needs funding and here it is spending more funds to acquire another business that is not so thriving. Making the investors to continue their support and to avoid a drop in the share prices become the painstaking preliminary task for the acquirer. The CEO may be interested, now he has to get the interest from all the top management in the acquisition as well as give satisfactory explanations to the shareholders.
The new staff has to be maintained, a corporate shuffling is on its way and responsibilities may change. Severance funds may go the higher end and protect the interest of too many employees on either side is a daunting task for the initiators of the deal. All these hurdles may seem to be too risky, yet can be efficiently tackled to reduce the risk and boost the performance on longevity.
People always look for additional incomes. Nobody wants to have just a single source of income. Given an opportunity, it is expected out of any individual to work on an external method to earn money and if the method is more convenient and easy to earn it will never be unutilized. Legit automated trading robot. But people hesitate to invest because of the barriers or the misconceived myths that make share markets and their investment difficult. Let us discuss some of them in detail.
People say investing in the stock market is just like gambling. The commonalities between the both are that they involve money and the element of so much chance in winning it all. Both of the things involve a lot of risks. And as both are considered, there is always an uncertainty in every step. But, what we need to consider here is that trading might be a chance factor considered like rolling a dice but a planned and successful investing cannot be a game full of chances. There is always a chance to change the probability of winning by adequate skill and knowledge.
It is often misconceived that the share market is often a game for the rich people. It is always told, to make money huge money is required. That is not the case. We can start investing with the minimal amount of money that we have. From the small investment that we make we can keep reinvesting and appreciating our profits exponentially. Great people in the investment field like Warren Buffet started investing with very less money that he had and now he has reached countless heights in investing.
There is also this consideration that it takes a lot of money to make huge profits in the share market. But it is not the real scenario. Technology has revolutionized the way we function and the way in which information is getting transferred. We have beautiful and well-crafted analysis being developed by huge analytical companies and delivered via applications through our mobile devices. It is not required that we have to read books and newspapers and understand the market statistics and invest. We have everything available in hand, and in some cases a good guide if we choose to use. They can assist us in choosing the right option to trade. We will have to spend some time in understanding the financials that are very well understood.
It is told investing is a huge risk. Investing can never be a risk. The risk is directly proportional to investment. The more risk you take the more investment and the amount you earn. Life is full of opportunities, it is our responsibility to take the best opportunity at the right time and invest in a great deal. We should also not get into our minds with all the wrong myths that are out there to confuse us and get us away. Investing is simple. Just choose to trade and believe in no myths as they are just barriers.
Do you know what is the worth of your company? Isn’t it your responsibility to know its worth and work on improving it? In case you didn’t know, it is not too late. A business appraisal is a process which basically dissects your financial situation and lays bare your options and capabilities. It provides an opportunity for any business to know its strengths, weaknesses and how to optimize your assets for maximum profitability. Here are a few reasons why people get their businesses valued.
Common reasons for business valuations
- Selling your business: This is by far the most common reason and in many cases the only reason for business valuation. The seller wants to ensure that he gets a good price for his business while the buyer wants to be satisfied that the business is worth the money. Business valuation provides valuable insights into the health of a business and its future prospects.
- Death of an owner: Family owned firms are often entangled in legal issues with each member wanting a share. The executor is pressurized to settle the will at the earliest. But ensuring that everyone gets a fair deal is tricky without the help of an unbiased business valuation which will present the correct picture to all parties involved. This will help the involved people to reach a decision if they want a speedy settlement or a profitable one.
- Divorce: When it is a joint venture between a husband and wife the scene gets murky with each wanting the maximum share when they separate. It is at such times the business valuation is a boon because it will provide the fair market value and this will ensure that each side gets what is their due and nothing more.
- For additional financial help: When seeking an external loan to improve your business from banks or other third parties they require a business valuation report to ascertain that you are in a position to pay back the loan. Your old records do not suffice because real estate keeps changing value, and manual records can have errors that you might have overlooked. When you employ the apt methodology appraisers they have the required expertise to determine your current worth, and an appraiser’s report is accepted by all banks.
No matter what kind, type, or size of business you are dealing with, the one thing in common between all these is to know how to manage your working capital to ensure a continuous flow of cash at all times. Here are 10 quick and simple tips to help you manage your working capital.
Know how to manage your accounts properly. All cash inflows and outflows must be recorded, tracked, and identified. In addition, all costs must be carefully reviewed in order to find the source behind every entry.
Make short-term and long-term cash projections in order to anticipate and arrange for any future cash requirements.
Be efficient in the process of invoicing. When it comes to invoicing, send out invoices after the arrival and departure of every goods & service, maintain a maximum term duration to clear payments, follow-up on every pending invoice, and cross-check payments with every invoice number to tally the figures.
Do not mix business with pleasure or personal expenses. Hence, always maintain different accounts for business, private, and pleasure to keep away losses and tax calculations. Similarly, loans taken for personal and business needs must also be maintained separately.
Always divide your profits wisely. Although it is natural that you take the first cut from the profits, ensure not to take it all. Always set aside some amount of the profits to meet unforeseen eventualities. Hence, maintaining a safety net from your profits is a good habit.
While setting allowances for travel, food, and accommodation for self and for employees, always ensure to be frugal. Go in only for the necessities and not for extravagance.
Always know how to handle other expenses prudently. For example, set limits for the fees paid to your firm’s lawyer, chartered accountant, auditor, and others. Alternatively, you can opt for other means of payment such as hourly payments or payment per case.
Marketing and public relations dig a deep hole in the firm’s pocket. Hence, be cautious while planning out every marketing event and ensure to adopt a good marketing strategy that focuses on minimum investments but maximum returns.
While thinking of business expansion, plan out a phase by phase expansion rather than going all in at one go.
Always choose from the minimum cost alternatives such as whether to buy or to rent, whether to loan or borrow, or whether to invest or divest. Always prefer options that are cost-effective.
For every business to work in a smooth and effective manner, the overall setup should be efficient and smooth. By this, it means all the people involved in a company’s working have to be satisfied and also contribute to their fullest capacity. The shareholders or investors who are an important part of the company also must be considered as an essential part of the company. They play an important role indeed.
Shareholders expect a share of the company’s profit on a regular basis and that come by an agreement when they buy shares and become a part of the company. Such share in profits are called and dividends and they are a form of real income which is paid to shareholders on the timely basis.
Let us look at the verdict of why dividends are important to a business as well as its shareholders.
- Dividends have tax advantages: tax is something that can become a burden if not properly handled. But for people who own shares, it becomes an easy way to evade such taxes and some of the shares provide the dividends with special tax advantages and they are known as qualified dividends. Therefore having tax benefit with this income creating factor can be conducive to any investor.
- Dividends are actual income: you invest for the future, but if your receive added advantages in the name of ownership of such an asset it is more lucrative to the investor. The dividend is a consistent and realistic income which is completely beneficial to a shareholder rather than it is with any term or condition. It is paid out to them on a quarterly basis.
- Dividends allow you to purchase more shares: the money you receive as a dividend can be put to fruitful use by reinvesting it by using it again for buying prospective shares which can help to grow your portfolio into a stronger and more profitable future.This is very important for an investor’s point of view to keep his portfolio intact and secure with better shares each time.
- Dividend growth fund: this is yet another easy way to better access to dividend making funds that can bring you a regular income from investing in the funds which have low expense ratios but yield consistent and decent dividend values. Therefore this is another option to have the income flow regulated.
While many legislatures around the globe are giving shock treatments to digital currency lovers by making all transactions with bitcoins as illegal, these troubled coin owners are looking up to one entity for relief. That is the supreme regulator of trade and stock market and the assets; the US Securities and Stock Exchange Commission.
The spreading demonetization move is preventing the miners and traders to carry out an exchange or transaction in the open market and has left millions of coin owners as guards of worthless currency. These coins may get trapped in the wallets as dead money with no way to enter the open market or another market and affect the cash flow in the economy.
Although there have been efforts to get some relief from the money transmission laws of each local or state governing bodies, it can lead to chaos and overlapping of rules, thereby confusing the traders. As a part of consumer right protection and financial policies, the holding and exchange of these currencies are to be carried out only by licensed money transmitters. In order to enter the open market, the traders have to surpass multiple governing bodies and the rules of each body may differ. This leads to time delay and extra expenditure along with the extra effort of meeting documental requirements and essentially discourage the cryptocurrency traders.
A single regulatory body is a solution
The officials of SEC have made remarks stating that for an investor or a trader to trade on digital currencies, he must register as an official trading entity or use any trading platforms registered with the SEC. He can play the roles of a security trader, broker, dealer or trade using the national securities exchange or other alternative trading systems. This will ease out the rules imposed on money transmitters, who in reality have a different method of activity when compared to digital currency transactions.
Many states exempt the aforementioned trading entities registered with the SEC from their local rules for money transmission license.
As a holder of digital assets and to continue as a trader in cryptocurrencies, you can get relaxation from SEC by utilizing the following tips. Continue with the activity using digital assets which are traded under the federal law and if you have other forms of cryptocurrencies, try to convert them with any loopholes.
If both the above options are ruled out, then you can put the effort to become a licensed money transmitter. Check for any categorical exemptions under the federal laws, as governed by SEC and constructively use them.
SEC can simplify the existing stringent rules and provide clarity regarding various regulatory overlaps, particularly of different states. By acting as a central regulatory authority rectifies all these problems automatically.
Financial capital is nothing but the economic resources with a company that is used by the company in meeting its demands as well as the demands of its customers in the form of the various products and services, the major aim of any business is to help the customers in fulfilling their needs thereby making a profit benefitting itself. Nothing happens without an initial investment and it is this financial capital that is invested in the company that speaks about how a company would be able to manage its funds for all its purposes. So when this initial requirement for the profit dreams is made and planned properly, it would definitely help the company in achieving profits to the levels expected by it.
Strategies that would help
Now below listed is a thread of situations where a business could get tested for such wise decisions regarding the financial capital. These are just simple strategies that would help a business in managing and appointing its financial capital in the right way.
- Satisfy your customers – customers are the kings of the market and they are the revenue generators for a business. So try to give them the best instead of looking at what the business gets from the services provided. This is important because when customers are satisfied and happy with the products of a company it would automatically bounce back in the name and form of profits and hence a business should mainly concentrate in serving its customers in the best possible way. And in doing this, the business should also be ready in changing its plans according to what the customers expect from them, be it even a change in the numbers.
- Do not wait for a failure but always have a back up for every possible thing that might affect your business, be it a business decision or a business equipment, in general, we wait for the worst to happen and then try to replace or repair them with another best one. This should be avoided which is the most common mistake committed by many of the business organizations these days.
- When you have debts, it is a wise and smart option to clear them first instead of mounting upon them. You might have a need to increase your loan amount in the name of some new business venture but in such situations, it is always advisable that you use a part of this new loan to offset at least a part of the previous loan.
As a quote goes, “Money is an amazing teacher, what you choose to with it, tells whether you are powerful or a powerless person”!! money is obviously the biggest weapon that can make one or break!! So, how we utilize it and what we make out of it is important.
Any business needs a lot of money, or say the basic bare minimum to sustain through and to fill the commitments. We see just the outline of the business, as in investing money, business works and bring either profits or losses and then the story goes on. But, have you ever thought how a well-established corporation or even the new start-up that just launched a year ago is rocking well?
What’s behind all that success? How do they manage and what’s missing in others? that is Financial modeling in the background!!! So, what is this? Read on to know.
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In basic words, it’s a rough process that says about all the operations of the organization in pictorial representation or graphs. This idea forecasts the financial scenario of the organization, with various parameters in the background.
What exactly happens in the background?
A financial model is inclusive of mathematical calculations that are taken from the history of the organization, showing the current financial scenario, the future projected growth plan financially, and the inventories and the actual depreciation expected over time.
So, the model has various categories and types based on different components variation, but there are a few that many companies swear by. Few are here:
- The Discounted Cash Flow model
- Leveraged buyout model
- Mergers and Acquisition
- Option pricing
- Sum of all the parts
- Comparative Analysis
So, now let’s talk about the necessity to have the financial modeling done:
These models as we said are used by small and big companies at large. Any company who is aiming to grow steadily is sure to use such models, that helps them in adhering to the goals and objectives set at the beginning.
- Keeping an idea and a plan for the company’s reaction to the economic growths, that might surge once or even hit low levels hardly.
- Getting an idea about the sum needed to borrow from growing expansions and operations.
- Getting into IPO, by analyzing the value of the firm.
- Defining the levels of risk associated with the business and organization
- Comparing the organization with its peers in the industry and having growth plans.
In order to be on the safe side with any investment plan, application of good money management techniques is essential, especially when you intend on trading on the Forex. Thus, a full-proof trading plan is very important. However, this is easier said than done because there will come a point in trading where you might have to go all-in to maximize your earnings.
Hence, along with a good trading methodology comes the ability to take timely actions and the capability to take and handle risks. Being a risk-taker will increase your confidence in the future trades and will multiply the profits within a short period, as long as the cards are played right.
Minimize risks and maximize profits
In order to minimize risks and maximize profits while trading, two important concepts of money management should be applied. These include:
Investing only a maximum of 10% or less than 10% of your total investment capacity on a single asset
Investing only a maximum of 50% or less than 50% of your total investment capacity at a time
In addition to setting limits on the total amount to be invested per asset per trade, other trading limits can also be predefined in order to control and manage your investments. Some of which are listed below:
Buy Limit – This is the value of the order as mentioned in the trade and it indicates the value at which a particular trade is placed. Buy limit value gives a projection of the future value, that is whether or not the value will increase or decrease.
Buy Stop – This is the value at which trade requests are made in order to buy a specific trade at the quoted price.
Sell Limit – This is a request that is made to sell the trade and the price is usually more than that specified in the trade order.
Sell Stop – Here trade request is placed to dispose the asset at a bid price that is equal to or greater than that mentioned in the trade order.
Buy Stop Limits – This is the limit that is achieved when the future price reaches the values as stated in the trade order.
Sell Stop Limits – This is the limit that used to stop an order placing and is achieved as soon as the bid value matches the order value.
Thus, efficient money management strategies will help you make you better investments and avert or at least minimize trade losses.
You must have heard about cryptocurrencies, especially Bitcoin. There could not be a single person out there who must not have heard about this cryptocurrency that rallied so fast in the last few years.
What is even more interesting to know is how the cryptocurrencies are produced or in other words mined. Cryptocurrencies are not produced like regular money. It is not governed by any central authority who can print it. Cryptocurrencies get produced by a method known as mining.
Mining of the new blocks
There is no central bank that regulates cryptocurrencies thus there is another way how every cryptocurrency transaction is gathered and recorded. This is done to form a new block. Those who carry out these tasks are known as dubbed miners. Every time some transactions are on the block when it gets appended a Blockchain. Those who append the block, in turn, get rewards with some amount of the cryptocurrency.
The task is hard to do and this is done so that the devaluation of the currency is prevented which could happen when lots of blocks are built. The miners would have to solve some complicated problems in order to mine cryptocurrencies.
Limitations of mining cryptocurrencies
The miners have to compete against each other when they are mining cryptocurrencies. The one who gets the right one forms a block and he gets a cryptocurrency payout.
The difficulty level gets higher and it gets harder as each new block needs to be mined. The rate at which the new blocks get created is steady. Also, there is a finite limit of the number of units that are generated.
Mining cryptocurrencies- Is it worth it?
Cryptocurrency mining can make some income for you and it can be done as a hobby. The digital currency is very assessable to the public now and a person can earn in hardware costs only. Cryptocurrency mining is definitely not a way to make enough income to be the primary source of income. You also need to invest a lot into hardware to start mining cryptocurrency in huge amounts.
It is late now and not as lucrative as it would have been had you can start mining Bitcoin in 2009.
The Bitcoin mining is not recommended for those who work on small scale. There is a lot of maintenance and investment costs and the process is also very difficult. This does not make it very profitable. It is profitable only when done on a large scale.