Skip to main content

The Intricacies of Mergers and Acquisitions

By 29.2.2024No Comments

Mergers and acquisitions are strategic tools that provide pathways to growth, growth in markets, and competitive advantage. They can also pose dangers and challenges. The intricacies of M&A should be understood by managers and executives to navigate the M&A landscape.

M&As result in a range of benefits for the acquirer and target companies, including increased economies of scale and improved purchasing power, increased distribution capacities and access to a variety see of new material and non-material resources, special capabilities of the corporate and risk diversification, geographical expansion, and many more.

The M&A process could take a lot of time, energy and even money. This means that the companies involved may have to give up other opportunities. A merger or acquisition may result in a decrease in profits for consumers as the market share combined could force them to pay more for services and goods.

A hostile transaction could be an acquisition. In hostile transactions, the acquirer offers the owners of the company they are buying from a price above what they believe to be the value of the business. The acquiring firm then takes over the business, removing any future competition and taking a larger share of the market.

The acquiring company can purchase the assets of the company it is targeting, leaving it with nothing but cash. (And maybe some debt, if there’s one). In this type of transaction, the acquiring company typically does not retain its staff of the company it has acquired. It may hire a few of the employees of the company that it acquires and retain its name.