Mergers and Acquisitions

Mergers and Acquisitions


Mergers and Acquisitions involve the process of combining two companies into one. The goal of combining two or more businesses is to try and achieve synergy — where the whole is greater than the sum of its parts.

Some of the benefits of M&A deals have to do with efficiencies and others have to do with capabilities, such as:

· Improved economies of scale. By being able to purchase raw materials in greater quantities, for example, costs can be reduced.
· Increased market share. Assuming the two companies are in the same industry, bringing their resources together may result in larger market share.
· Increased distribution capabilities. By expanding geographically, companies may be able to add to their distribution network or expand its geographic service area.
· Reduced labor costs. Eliminating staffing redundancies can help reduce costs.
· Improved labor talent. Expanding the labor pool from which the new, larger company can draw can aid in growth and development.
· Enhanced financial resources. The financial wherewithal of two companies is generally greater than one alone, making new investments possible.
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