Mergers and acquisitions typically have the goal of strengthening the position of two companies so that their combined value exceeds their values. The major justifications for mergers are technology integration, higher income, regional expansion, higher growth, diversification, tax advantages, etc. From beginning to end, the merger and acquisition process, which involves numerous processes and procedures, typically takes months.
Benefits of Acquisitions and Mergers
It is frequently less expensive to buy than to build—If your business is struggling and not growing as projected, it could be less expensive to buy an established company than to internally develop.
A decrease in expenditures and overheads through the sharing of expenses, other budgets, purchase costs, etc.
Primary mergers and acquisitions operation types
Horizontal Merger:
Merging two or more businesses in the same or related industry to enhance market share and income. Gaining more market share enables these businesses to exert price control.
Vertical Merger:
This kind of merger is used to diversify into new markets, such as when the manufacturing sector merges with its supply chain company.
Conglomerate Merger:
Companies from several industries merge to diversify their business.
- The overall performance efficiency tends to grow and onboard costs tend to decrease when you integrate or combine your business activities.
- The acquiring firm may be given the chance or prospect to increase its market share without making a significant effort as a result of a merger. Instead, in what is known as a horizontal merger, the acquirers essentially pay a set sum to buy a competitor’s business.
- When one considers buying their distributors or suppliers, they can avoid a lot of expenses that would otherwise be incurred. For instance, a vertical merger occurs when an acquirer buys one of its suppliers and avoids paying the marginal expenses that the supplier previously levied.
Factors to Consider in Mergers and Acquisitions
- Method of evaluation (Cash or Stocks)
- Management blending
- Tax and accounting treatment
- Goodwill
Professionals at GSPU with in-depth knowledge of several industries can help you to add value and overcome obstacles throughout the M&A process in:
- Identifying and creating integration strategies
- Deal Structure for M&A
- Contract Negotiation
- Supervising the M&A Procedure
- Drafting and reviewing legal matters
- Execution & Closure of the Deal