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In a transaction structured as a merger or ean quity purchase, the
buyer acquires all of the assets and liabilities of the acquired entity.
There are no major transaction costs. Hedge funds and ‘shareholder activism': In 2007, after acquiring
1 per cent of the shares of major Dutch bank ABN AMRO,
the British hedge fund TCI led an attack demanding the bank
split up or sell to the highest bidder to produce shareholder value.
In addition, the monetary policy pursued by the central banks, which has been called ‘quantitative
easing' played a major role. In addition, technological changes prior to the merger movement within companies increased the efficient
size of plants with capital intensive assembly lines allowing for economies of scale.
In addition, many of these mergers were capital-intensive.
As a result, the efficiency gains associated with mergers were not
present. As a result, both companies and private equity (10-15 per cent of deals) remained able to do transactions. -
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