Introduction Mergers and acquisitions have an immediate impact on organizations with changes in ownership, ideology and ultimately practice. There are multiple reasons, motivations, economic forces and institutional factors that can, taken together or in isolation, influence corporate decisions to engage in mergers or acquisitions. The financial risks of merging or acquiring an organization in another country and how those risks can be mitigated are important questions for companies to research. This article will examine the sensible and dubious reasons for mergers and acquisitions and the benefits and costs of cash and stock transactions. Mergers and Acquisitions According to Florida Incorporation, a merger is the legal combination of two or more companies in which one company survives and the other companies cease to exist. An acquisition involves gaining control of another company by purchasing all or a majority of its outstanding shares or purchasing its assets (Florida Incorporation, 2006). According to Gilles McDougall, the reasons for mergers and acquisitions are numerous and include: · Diversifying or expanding markets; · Acquiring particular production technologies; · Taking advantage of a workforce with particular skills; or · To benefit from "good opportunities" to take over a company. In recent years, pressures from international competition, financial innovation, economic growth and expansion, increased political and economic integration, and technological change have all contributed to the increased pace of mergers and acquisitions. Cash and Stock Transactions There are several options available to businesses looking to acquire a foreign company...... middle of paper ......n July 9, 2006 from http://www. florida-incorporation.com/glossary.htmlInvestopedia. (2006). Exchange rate risk. Retrieved July 9, 2006, from http://www.investopedia.com/terms/f/foreignexchangerisk.aspInvestopedia. (2006). Exposition of the translation. Retrieved July 9, 2006, from http://www.investopedia.com/terms/t/translationexposure.aspInvestopedia. (2006). Economic exposure. Retrieved July 9, 2006, from http://www.investopedia.com/terms/e/economicexposure.aspMcDougall, Gilles. (1995). The economic impact of mergers and acquisitions on companies. Retrieved July 9, 2006, from http://strategis.ic.gc.ca/epic/internet/ineas-aes.nsf/vwapj/wp04e.pdf/$FILE/wp04e.pdf Week 5 lesson. (2006). FIN 325 Mergers, Acquisitions and International Finance. Retrieved by rEsource on July 7, 2006, from https://ecampus.phoenix.edu/secure/resource/resource.asp