Reasons For Mergers And Acquisitions

If a large conglomerate thinks that it has too much exposure to risk because it has too much of its business invested in one particular industry it might acquire a business in another industry for a more comfortable balance.

Reasons for mergers and acquisitions. Generally the consolidation of two businesses results in synergies that increase the value of a newly created business. Financial synergy for lower cost of capital improving company s performance and accelerate growth economies of scale diversification for higher growth products or markets to increase market share and positioning giving broader market access. Reasons or motivations for mergers and acquisitions 1. Following are some of the various economic reasons.

Announced its intention to acquire japan based chip supplier tokyo electron ltmd. Companies pursue mergers and acquisitions for several reasons. Increasing market share and competitiveness as a motivation for mergers and acquisitions. Mergers may prove to be beneficial depending on the strategies adopted but it would not be right to say that all mergers have been successful.

The most common motives for mergers include the following. Mergers and acquisitions take place for many strategic business reasons but the most common reasons for any business combination are economic at their core. By acquiring other companies a desired level of growth can be maintained by an enterprise. Growth through merger or amalgamation is also cheaper and less risky.

Reasons for mergers and acquisitions. Mergers and acquisitions m a is a general term used to describe the consolidation of companies or assets through various types of financial transactions including mergers acquisitions. Reasons mergers and acquisitions happen cios need to understand why a merger or acquisition is being done. There are many reasons behind mergers and takeovers.

Mergers and acquisitions sometimes happen because business firms want diversification such as a broader product offering. Mergers and acquisitions m as are the acts of consolidating companies or assets with an eye toward stimulating growth gaining competitive advantages increasing market share or influencing. Increased capabilities may come from expanded research and development opportunities or more robust manufacturing operations or any range of core competencies. On 25 september 2013 united states based chip supplier applied materials inc.

Mergers acquisitions and takeovers have always kept the interest of economists alive.