Mergers and Acquisitions Overview

Summary:

Mergers and Acquisitions (M&A) is a topic in strategic business management that involves the buying, selling, dividing, and combining of different companies and entities to promote growth and value creation. M&A can take the form of acquisitions, where one company takes over another and establishes itself as the new owner, or mergers, where two companies of similar size join forces to operate as a single entity.

The motivations for M&A include achieving economies of scale and scope, increasing revenue and market share, cross-selling products or services, creating synergies, leveraging tax advantages, diversifying geographically, and accessing hidden or non-performing assets.

Different forms of M&A include horizontal mergers between companies in the same business sector, vertical mergers involving the acquisition of suppliers or customers, and conglomerate M&A, which involves the merger of unrelated companies for diversification purposes.

Brand considerations play a significant role in M&A, including deciding what to name the merged company, how to handle overlapping or competing product brands, and the overall brand portfolio structure. The choice of brand strategy can have a substantial impact on the success of the merger or acquisition.

Excerpt:

Mergers and Acquisitions Overview

Mergers and Acquisitions (M&A)

Learning Objectives
By the end of this unit, you should be able to:
• Explain the concept of Mergers and Acquisitions
• Explain the different forms of Mergers and Acquisitions
• Examine the reasons companies Merge and Acquire
• Evaluate the challenges associated with Mergers and Acquisitions

Introduction
The decrease in business activity and the fall in the production volume in the sectors of the economy relying on long-term crediting is a characteristic feature of modern recessions. The pessimistic expectations of entrepreneurs concerning product demand lead to falling direct investment into business despite unlimited investment opportunities due to the developed capital markets nowadays. As a result, it has created the opportunity for the development of the acquisition of enterprises. Potential investors are different, and their investment motivation is different, but the goal is the same – to increase the value of the business and its efficiency as a result of mergers and acquisitions.