Analysis of the Benefits and Risks of M&A -- Taking Google's Acquisition of YouTube as an Example

Abstract

There are many companies integrated together as they want to increase the market share of their own company. However, the background of this essay will be their action may not be wise as they do not have clear valuation and they do not analyze the competitive advantage of another company so they may not able to manage it and the cost of it will be very high. My research will utilize the case of Google’s acquisition of Youtube to analyze the merit and disadvantages of M&A. This research will use current ratio, total assets turnover rate and return on equity to assess the debt repayment ability, operational ability and profitability respectively after the acquisition. Apart from that, i will give a list of the potential risk that may happen in the process of valuation and payment such as overpayment. Suggestion will also be given to those problems and i will conclude my research comprehensively by explaining the point that need firms to attention when they are integrating. This research may help people have a greater understanding of M&A, this will also notice that importance of making valuation and assessment in a detailed way.