DISCOVER THE REAL CHALLENGES OF MERGERS AND ACQUISITIONS. An operation often highlighted in the media, the merger acquisition represents a somewhat delicate operation. Its success requires the intervention of several experts in order to bring together two companies with common interests. The objective is to allow one of them to take control of their respective activities.
What is a merger acquisition transaction?
In general, it is considered that a merger and acquisition operation represents an excellent means of growth for a company. Some people think this is a complex financial practice. However, this is one of the financial strategies that companies can use to take advantage of multiple advantages. By opting for mergers and acquisitions, they will have the privilege of optimizing their activities to face the competition. In other words, the use of this financial strategy essentially contributes to their economic development.
However, it must be understood that the merger and the acquisition represent two very distinct financial transactions. That said, a merger does not necessarily lead to an acquisition and vice versa. The first is to carry out a transaction by which two companies have made the decision to join in order to form a single structure. The idea is to establish a competitive advantage guaranteeing additional value. On the other hand, an acquisition allows a company to buy another company, partially or entirely. In short, a merger acquisition therefore improves the image of the company on the market by focusing on the creation of value.
he means to reach this agreement are very diversified and we will discover them in this section. But before going any further, here is what we mean by “merger acquisition”.
The interest for companies to opt for a merger acquisition
The objective of a merger acquisition is to offer companies a reliable means of growth to improve their valuation. For this, the operation must be carried out correctly in order to quantify a creation of value while taking into account the risks incurred for this type of operation. One of the advantages of a merger acquisition concerns the realization of synergies. Added to this is the increase in financial power as well as the development of activity. Also, the acquiring company during the merger acquisition will also gain market share by eliminating competitors.
Merger and acquisition is an essential way to develop and increase its presence in a market. Thanks to this external growth, it is easy to accelerate the development of the companies concerned. Companies looking for a rapid increase in their position on a market prefer this operation more. The latter allows them to establish themselves in a new geography and complete their offer of services or products. On the whole, the merger acquisition presents a multiplier effect making it possible to carry out more activities. The companies concerned can, for example, increase their size, their visibility and their bargaining power.
Good to know
This kind of operation is simply beneficial for companies wishing to develop their activities in the market. That said, the merger acquisition covers various operations guaranteeing a means of rapid and reliable growth. The valuation of the company is one of the main advantages to discover during this operation.