If you are a business-inclined person and wake up hearing the business news of the day I bet you hear this term Merger and Amalgamation or acquisition every day!Yes, it is one such concept which requires top-rated mention in the business sense. It happens with many companies and hence it is an everyday affair.
Finding the meaning of such a common word is the task we take up in this article and bring to you the simple version of what really happens with the majority of companies and their functioning.
Though the words mergers and acquisitions are used together there are slight differences in what they actually mean. A Merger is when one company decides to join hands with another company to enjoy the benefits of business from both the company’s profits. This happens for the reason to accumulate higher profits by combining the two companies together. On the other hand, an acquisition means when a company which is doing better at business decides to take over another company which may require help to survive and supports financially. Thus this is the difference between the two technical terms of business.
The mission of M &A
The mission of companies together requires being accomplished in the full sense. For this various criteria will be considered and the synergy which means the method of enhancing the efficiency of the new business and the reason for why the new combination was made is found.
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Some of the implications of an M &A are the following:
- Economies of scale: it becomes easy to buy supplies like stationery when the company is huge in size. It also helps them to negotiate with their suppliers easily.
Even for the bigger purchases the bigger size of the company plays a better role.
- Staff reduction; in order to improve the working and efficiency of the company in general, the staff is reduced from every department. This is also to cut down the resource cost and enhance proper functioning of the company.
- New technology acquiring: when a big company merges with a smaller one with better technology and unique features, it becomes a successful deal for both of the companies.
- More wide market reach: now it is easier to capture a better market in the sense that the customers of both the companies come together to get the benefits from the new merged one.