Factors That Drive Mergers And Acquisitions

 

Though the term mergers and acquisitions are always seen and discussed together as synonymous words, there is a difference between them. A merger is when two companies come forward to get merged into one and they decide to combine and collate all their operations, their business concepts, their business secrets and everything together as one.

The acquisition is when a company takes over the other thereby accepting to take all its financial and business dealings as such and later bringing in changes in them according to its operations and business dealings. So in both cases, there are two companies becoming one but under different heads. Now there are a lot of factors that influence and trigger one of these.

  • Strategy – we have come across a lot of mergers and acquisitions but have we ever thought of the baseline that would have lead to this? The baseline for any two companies merging or when there is an acquisition happening would definitely be a strategic fit. Yes, it is a very advantageous and profitable move in case of both merger and acquisition. Generally, companies that decide to come closer under any of these two would have a match in their strategies. It might be either in terms of the market they are serving currently, the type of product they are dealing with or a service that would complement each other. It is this that actually makes the mergers and acquisitions a success and a possibility too making it a profitable move.
  • Synergy – generally companies that come together either for a merger or an acquisition try to merge department wise eliminating all the extra and the temporary ones in each of them. This makes it a more meaningful move wherein the marketing department would have marketing executives dealing and selling the products of both companies matching their suites thus bringing profits to the company. This way the other departments also function to benefit the major move and finally the company.
  • Another important factor that drives mergers and acquisitions is the acquisition or absorbing of talents. When two companies merge, they get to pool their talents into one single area thereby focussing and driving a better and enhanced approach to the customers. By doing this many companies have made their successful moves and they have also been very successful in their business operations. In such situations, there also happens a better understanding and sharing of knowledge giving birth to new ideas and concepts.

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