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Definition of Consolidation: Characteristics and Effects Caused Definition of Consolidation Consolidation can be interpreted as the merger of two or more businesses, a merger is carried out by establishing a new business or dissolving an old business without liquidating it first. Consolidation can also be defined as two companies joining or dissolving, for the sake of law and then instead the two companies establish a company with a new name. Although the new company will be taken over the assets and rights and liabilities of the two companies that have been dissolved before. The purpose of self-consolidation is to unite each element that has certain similarities. For example, religion, regional origin, or groups with the same goal or vision and mission. However, this definition of consolidation is actually used in various fields, not only in the business field, for example accounting and sociology. Here are some consolidation notions from various fields. In the business field, consolidation can be interpreted as the amalgamation of two or more companies that become or form a new company. Where the new company will take over all rights and obligations of each company that has been merged. Consolidation in the business field can also be interpreted as the merger and acquisition of many small companies into several companies with a much larger scale. Consolidation in business occurs, when two or more businesses combine to form one new entity with the same expectation, which is to increase market share as well as profitability and profitability in combining industry talent, expertise and technology. The notion of consolidation in this business, in contrast to the practical term of merger. This is because companies that consolidate can produce new entities. Meanwhile, a merger in business can be interpreted as the act of one company trying to absorb another company, but another company that is absorbed still exists and is not disbanded. Meanwhile, in the field of accounting, the definition of consolidation is the combination of reports of all equity, assets, liabilities and operational accounts owned by a parent company and subsidiaries in one form of financial statements.
The definition of consolidation in the field of accounting has the meaning of financial statements that provide a comprehensive picture. Especially regarding the financial position of the parent company as well as subsidiaries and not the position of the stand-alone company. According to the context, the definition of consolidation in the field of accounting refers to the aggregation of financial statements of a group of companies as a form of consolidated financial statements. In general, information from the parent company as well as subsidiaries will be treated as if it comes from the same entity. The definition of consolidation according to the field of sociology, is a form of strengthening community membership in a social group that has several elements, such as elements of ethnicity, religion, social status, gender and other elements. In the field of technical analysis as well as trading, consolidation is a term that refers to the price of securities that have asolization in a corridor and in general, consolidation can be interpreted as a form of market indecision. In that field, the term consolidation is generally used to describe the movement of the stock price, on a fairly well-defined pattern of trading levels. Consolidation is also considered a period of doubt, which will end when the price of the asset moves up or down on the trading pattern. In the field of technology, consolidation refers to data storage or server resources that are shared with users and accessed by many applications. In technology, the definition of consolidation is to have the goal of making the use of computer resources more efficient and preventing a server and storage tools from being underutilized to take up too much space. The definition of consolidation in the field of technology is also divided into two, namely server consolidation and storage consolidation. The definition of server consolidation involves reducing the number of servers as well as the location of servers in an organization. Thus, from the definition of consolidation above, consolidation can be defined as an act to combine two or more bodies, companies, groups or banks into one, thus forming a new company, group or body.
is the unification of two or more corporations through a dissolution and the formation of a new corporation. Consolidation Traits To understand better, regarding consolidation, you need to know the characteristics of consolidation. Here are the characteristics of consolidation. There is a merger or amalgamation of two or more companies, by forming a new company. Any old company that has been merged, will be dissolved without going through a liquidation process. A new company that arises from the results of the amalgamation, must have the status of a new legal entity. The draft of the consolidation as well as the concept of the consolidation deed, must be approved by the GMS of each company. All assets and assets of the merged company will automatically switch to the new company formed. The concept of a consolidation deed, which has been approved by the GMS, will be stated in the consolidation deed that has been drawn up before a notary using Indonesian. The new company from the consolidated proceeds, it will have the status of a legal entity with the date of issue in accordance with the decision of the Minister of Law and Human Rights regarding the company that merges without going through the liquidation process. Effects of Consolidation and Why Companies Do It When the company decides to consolidate, there will be securities resulting from the consolidation. In general, the consolidated effect carried out by the company can bring positive effects, namely in the form of improved company quality and the company is more developed. If you know the consolidated securities, of course, the main reason for the company to consolidate is to benefit the company. However, there are several other reasons when the company consolidates it. Here's an example of a bank consolidating.
There is a health problem, when a bank has been declared unhealthy by the Central Bank, then the bank will usually merge or consolidate with another bank. So the best option for the bank, of course, is to join other banks that are still healthy. The existence of capital problems. If the capital owned by a bank or company is considered too small, so that the company or bank is difficult to expand its business, then the bank or company can also join other banks. The goal is that the merged bank or company has much greater capital. So, it will be easier for the company or bank to develop its business. The existence of management problems. Some companies or banks, may have less professional management, so the bank or company suffers losses continuously and is difficult to develop. This will encourage banks or companies to consolidate with other banks or companies that have more professional management. Technology as well as administration. Banks and companies that still use simple technology, often experience various problems, especially due to the times. Therefore, to obtain more advanced technology, of course, the capital required is not small. Therefore, banks and companies will choose to consolidate with parties that have advanced technology. The desire to dominate the market. This fifth reason, in general, is not clearly announced to outsiders, but is only known by certain parties. By consolidating, the bank or company will also have an increasing number of branches and the number of customers and make the company or bank dominate the market. How the Company Consolidates There are several ways that companies that want to consolidate must go. The Board of Directors of the company that is going to merge itself, must draw up a proposed consolidation plan, the proposed plan, must be approved by the commissioners in each company. The proposed consolidation plan will then be used as material to compile a consolidation plan. The draft was jointly drafted by the directors of the company that will carry out the amalgamation.
There are several companies that consolidate, some of the consolidated companies are Bank Mandiri which consolidates with Bank Bumi Daya (BBD), Bank Dagang Negara (BDN), Bank Ekspor Impor Indonesia or Bank Exim and Bank Pembangunan Indonesia (Bapindo). In addition to banks, there is a SmartFren company that is also a consolidated company from PT. Mobile 8 Telecom Tbk (Mobile 8) and PT. Smart Telecom. Bakrie Telecom and PT. Sampoerna Telekomunikasi Indonesia (STI) also consolidated with several companies.
- Consolidation of mass action The masses consolidate, with the aim of combining the forces they have in order to achieve a common goal. An example of the conglominations of mass action, is the demonstrations held from September 23 to 24, 2019, namely at the Corruption Reform demonstration.
