Mergers and acquisitions sound similar for many but they are entirely different. Merger happens when two equal companies combine and continue their existence together. On the other hand acquisition happens when one company takes over the other company. In merger both the companies equal rights on the combined company but in the acquisition the dominant company will have total rights on the acquired company while the operation continue to exist. Merger of the companies happens at will whereas acquisition may happen by force/ will .This articles aims at examining the big reasons behind mergers and acquisitions and their benefits
Though there are many reasons behind mergers and acquisitions, increasing the capabilities of their business stands as the top most reason behid. The companies look for mergers when the company wanted to increase a range of core competencies . This may happen even the comapy wanted to control expensive manufacturing expenses
The merger and aquistion may takes place betwwen two companies for the stratagic reasons like gaining the competetive advantage and improving and deeloping the current business. Though stratagic reasons stand as strong motives behid these mergers and acquisitions, you should be vary careful abaout the factors such as right target company, price paid for the merging company.
This stands as anaother top reason behind the trendy mergers and aquistions today. The business organisation that is intertested in improving its finaincil performance is looking towards mergers and acqusitions. The finaincil befits behid the deal maotivates many to look forward. When two companies with similar products and service combine together, they will be abale to reduce the cost of production by integrating and streamling the process.
When the merger or aquistion takes place with the managerial motives. It is often a big failure because the process or merger or takeover came into picture either protecting the survival of the company or replacing the leadership. When the owner cannot find somebody to succeed them in the business, they then to merge or involve in the takeover by other domineer company. This kind of action takes place purley because of managerial interests and nothing else. They may choose this option to cash out the money to invest in some thing else. Acquisitions also happens when the company has no other option than surrendering to protect the survival of their company.
Reduce managerial staff
One of the great benefits with mergers and aqusitions is reduction in humn resource investement. If the two companies merge together to form a conglomerate, there is a huge cut dwn in the human resouce investment because no company needs two personal for handling one job responsibslity unless it is a team work.
Gain access to new technology
When the company is acquired or merged with other company, the exchane of technology between the two cmpanies will make them acessible to new technology, thus making a significant contribution in production increase.