When you hear the terms “mergers” and “acquisitions,” you know one or more businesses are experiencing major changes in strategy. Mergers and acquisitions also present new opportunities for existing companies to grow both their vision and their size. A clear understanding of this business principle is critical for proper decision-making. It will also help you avoid the common pitfalls that can come after completing the process.
The first thing you need to be clear on is the meaning of the terms. Since this is a legally recognized process, you need to have all the facts right. The following post describes these terms in detail:
Mergers And Acquisitions – M&A
What is ‘Mergers And Acquisitions – M&A’
Mergers and acquisitions (M&A) is a general term that refers to the consolidation of companies or assets. While there are several types of transactions classified under the notion of M&A, a merger means a combination of two companies to form a new company, while an acquisition is the purchase of one company by another in which no new company is formed.
The term M&A also refers to the department at financial institutions that deals with mergers and acquisitions.
BREAKING DOWN ‘Mergers And Acquisitions – M&A’
M&A can include a number of different transactions, such as mergers, acquisitions, consolidations, tender offers, purchase of assets and management acquisitions. Read more at Investopedia…
You now have a better understanding of what mergers and acquisitions are, as well as the various transactions that may be involved. This makes you better equipped to decide whether either of them are appropriate for you or your business according to the goals you want to achieve.
There may be a number of things a company wants to accomplish with an M&A. The following post explains several of them in further detail:
Not all mergers and acquisitions maximize shareholder wealth, and in some instances, quite the opposite holds true.
Below are some of the legitimate reasons a company may decide on a merger or acquisition.
Product and Investment Diversification
Mergers sometimes happen because business firms want diversification — a broader product offering, for example. If a large, conglomerate firm thinks that it has too much exposure to risk because it has too much of its business invested in one particular industry, it may buy a business in another industry.That would provide a measure of diversification for the acquiring firm. In other words, the acquiring firm no longer has all its eggs in one basket. Read more at The Balance…
As you consider any plans to incorporate a merger or acquisition into your growth strategy, it is important to be clear about the advantages and disadvantages associated with each move.
The following post details the possible benefits and disadvantages of mergers and acquisitions:
When M&A Works as a Growth Strategy
Mergers and acquisitions make perfect sense in a variety of situations. For example, maybe an opportunity presents itself that requires fast, decisive action. Or maybe a competitive threat compels a defensive move to get bigger, faster.
Here are five situations in which mergers and acquisitions have proven useful as a growth strategy:
- Fills critical gaps in service offerings or client lists
When the marketplace changes in response to external events or new laws and regulations, it can create a gap in a firm’s critical offerings. It is a prime opportunity for a strategic merger. Read more at Iris…
From what you’ve read here, you can tell that mergers and acquisitions require a great deal of planning, vetting and legal processing. If you aren’t completely clear about your objectives and who you’re conducting business with, you could end up creating catastrophic results for you or your company. It is critical to have expert legal guidance from an attorney who is well-versed in mergers and acquisitions before and throughout this complex process.
When you work with Jonathan Meek at Meek Law Firm, you will get the expert advice you need to take your business where you want it to go. Contact Meek Law Firm today and schedule a consultation to discuss your needs. Call (704) 848-6335 or use the contact form on the website to set an appointment. We look forward to hearing from you.