Future of Merger & Acquisition

A combination of two companies into one bigger corporation where one of them is absorbed by the other is the simple definition of Merger, the unity of the assets of two companies into one legally and also the sharing of the liabilities or the debts of the acquired company is inclusive when an M& A happens.

What happens when two companies merge?

  • the existing or the surviving company assumes all the rights of the acquired company including the assets, liabilities, privileges
  • major competition is avoided as mostly the M & A happens when there are two very competitive businesses and once acquired, the competition is lessened and rivalry is negated,
  • number of social benefits, as the scope of reducing the cost, improve the quality of the products and get an increased output with higher profit margins, hence the government to go easy on in the process of acquiring and merging businesses as they are highly regulated,
  • most of the unutilized skill sets of people and technical aspects are increased and are used to full capacity
  • underused assets are optimally used for increasing the output and increase the profitability once the M & A is completed

The market is one of the most upper forces which make companies to even think of M& A; though competition and price are determinants the future ahead has more and more M& A happening due to the market conditions prevailing and the edge over other similar industries in the business.

Factors which influence M& A:

  • most of the strength and weakness of each of the company are tabled and is a major factor in deciding whether it is a viable option as one company may have a higher liability and the other may have less debt to equity ratio which is a lucrative offer
  • a key factor in determining whether the two companies fit in strategically, there should not be a merger or acquisition happening just to take over the liabilities or the customer base, a good equation of similar organizational culture, leadership quality and conducive environment gives the required scope
  • the amount of branding a company has or will have once two companies are merged is yet another influential factor on how good the marketing of the product is done, and how much percentage of market share such products hold, the higher the percentage of market share a product or service has, higher will be the profitability if the branding is done well.