June 5, 2014

A successful merger is beneficial for both companies

The purpose of a merger is for two companies to come together in a way that will be more beneficial than when the companies were on their own. A decision like this will result in many changes for each organization, and as such must be handled carefully throughout each step of the process.

One of the main purposes of a merger or acquisition is to increase value for shareholders. When two companies combine, the intent is that they will be more valuable together than they were as two separate entities.

There are many factors that go along with business mergers. From the addition of valuable assets, to increased funds, to the potential to breathe new life into a struggling venture, the motivations for merging are many. 

A merger can mean a company acquires new technology that may complement the technology they already have. By increasing these assets, companies are able increase their competitive advantage in the marketplace. 

Talent is another major reason for a potential merger. The addition of talented staff members can be a major asset to a company working to stay competitive in the marketplace. Acquiring the best talent helps create superior products. 

By merging, companies take a step toward being able to reach new markets, which can help establish ways to generate more revenue. Each company may have access to markets that the other wants to gain, and by merging, they can accomplish this wider reach together. 

Merging is also a way to reduce competition in a sector of the marketplace by joining forces. A successful merger will lead to a stronger company that is better positioned to take on competitors. 

The potential benefits of a merger or acquisition may be substantial, but must be carefully planned for. Before moving forward with a merger, consulting with an M&A advisor will help you prepare a sound strategy.