Mergers and Acquisitions

What are Mergers and Acquisitions?

Mergers and Acquisitions (M&A) refer to the strategic process where companies consolidate through various types of financial transactions. A merger occurs when two companies join to form a new entity, whereas an acquisition involves one company purchasing another, with the purchased company being integrated or operated under the new ownership.

Short Description: The process where two companies combine (merger) or one company takes over another (acquisition) to achieve growth objectives.

• Merger: The combination of two firms into a single new entity.
• Acquisition: The purchase of one company by another, where the acquired company may be absorbed or operated separately.
• Strategic Goal: Typically aimed at increasing market share, reducing competition, or leveraging synergies for cost savings.
• Types: Horizontal, vertical, conglomerate, and market-extension are types of mergers and acquisitions, each with specific strategies and objectives.

M&A activities can significantly reshape the competitive landscape of industries and provide companies opportunities for expansion, efficiencies, and increased profitability, although they also involve substantial risks and challenges.