Due diligence on mergers and acquisitions is an important technique for "looking under the hood." Whether it's a merger of industry heavyweights, the integration of two smaller enterprises, or a potential JV, your assumptions must be validated. Before the deal closes, System 2 thinking make sure you have a thorough knowledge of the accretion potential, risks, and ramifications.
What is a Merger?A merger is a business strategy in which two firms combine and operate as if they were one legal company.
The businesses that agree to combine are generally equivalent in terms of size and scope of activity.Why do Mergers Happen?Mergers take place for a variety of reasons.Companies will be able to obtain additional resources and expand their operations as a result of the merger.A company may combine in order to benefit its shareholders.
Following the merger, existing shareholders of the original organisations acquire shares in the new business.Companies may agree to combine in order to access new markets or diversify their product and service offerings, resulting in increased revenue.Mergers may occur when businesses desire to buy assets that would take too long to develop internally.A firm with high taxable revenue may attempt to merge with a company with significant tax loss carry forward to reduce its tax liability.A merger of firms will decrease rivalry between them, lowering the cost of product advertising.
Furthermore, the price decrease will benefit customers and, as a result, sales will grow.Mergers may result in improved financial resource planning and use.Types of Merger1.
Raises prices of products or services2.
Prevents economies of scaleILOGTEK top-notch Virginia’s IT staffing and Employment agency (Staffing M) which is a leading organization that matches employers to employees.
