Mergers and acquisitions

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Whakataukī: 

Whaowhia te kete mātauranga — Fill the basket of knowledge

Mergers and acquisitions (M&A) refer to two companies combining. In an acquisition, one company buys another outright, while a merger creates a new combined legal entity under one corporate name. M&A deals can be valued by comparing similar companies in an industry. M&A activities can also include acquisition of major assets, tender offers for stock, or even hostile takeovers. Not all M&A transactions succeed.

A mutual fund is an investment where money is pooled together to buy a mix of assets, including equities, stocks, bonds and other securities. A mutual fund investment portfolio is managed by a fund manager. By investing in mutual funds, people diversify their investments, which can help reduce risk. Investors earn returns based on the fund’s performance minus fees and expenses. Unlike exchange traded funds and LICs that are traded on a stock exchange, mutual funds must be bought directly from the financial company that manages them.

A money market fund is a type of mutual fund that spreads money across lower-risk investments, such as cash, or cash equivalent securities, certificates of deposit, or US Treasury securities. These funds are managed by fund managers and backed by investment fund companies with the goal of keeping the value of the money stable. Learn more about money market funds.

The minimum subscription is the lowest amount of IPO shares investors need to buy for an IPO to complete successfully, which is typically 90%. If the 90% threshold isn’t met, the company returns the money from the orders placed. This situation is considered an undersubscribed IPO. While it’s not common, it could be due to poor promotion, or share market or economic conditions at the time.

A company’s market cap, or market capitalisation, is their total dollar market value, or their worth as determined by the share market and investment professionals. A company’s share price and how many outstanding shares dictates their current value: Share price x number of shares = market cap (value of the company).

A market order or buy order is the most straightforward way to buy and sell shares. It’s an instruction by an investor to a broker to buy or sell shares, bonds, or other assets at the best price currently available on the stock exchange. A market order is the default choice for buying and selling for most investors most of the time. When a market order is placed, the trade happens immediately at the current market price (or when the share market is next open). The price when an investors submits a buy order may differ slightly from the final price of the order due to after hours market movements, which occur when a market is officially closed.