5 Reasons Why Mergers & Acquisitions Are Beneficial For Business

3 min readMar 23, 2022

As an establishment grows, its biggest corporate action is going public. However, merging or acquiring is the next most significant move. A merger or acquisition can allow a company to expand into new markets or territories, gain a competitive edge, or acquire a variety of technologies and expertise.
Nevertheless, between privately-held companies present a number of unique legal, business, human resource, intellectual property, and financial concerns. A good understanding of the issues that commonly arise when selling your company is always helpful.

What are mergers and acquisitions?

Though the two sound similar, there is still some difference when thought from a business perspective.
A merger is a business strategy in which two companies combine to increase the financial and operational strength of the combined organization, whereas an acquisition is an act of purchasing the whole or part of a target company.
Acquiring another company’s strengths helps a company become a bigger brand by gaining its strengths and synergies. Acquisitions are made primarily to increase market share and gain access to untapped assets and technology

What makes mergers and acquisitions so lucrative for businesses?

Merging or acquiring two businesses allows market entities to increase income and revenue at a much faster rate than they could achieve organically as separate units.
Taking a closer look at key factors of making M&A profitable will help us understand why it is so successful.

1. The most effective method of acquiring talent and intellectual property

Many industries are experiencing an acute shortage of professional staff with experience.
Business today is driven by intellectual property (IP). Once hidden away and protected, intellectual property is now actively bought and sold. Many companies find that the quickest path to market dominance is to acquire a company and its IP.

2. Opportunity to capitalize on synergies

Mergers and acquisitions, when done well, can result in better synergies and value propositions. A merger or acquisition allows two companies to combine their strengths, which results in a new entity that is the best of both companies’ efforts.

3. To diversify

By merging and acquiring companies, businesses are able to enter a new industry, market, and audience. One can diversify their products, services, and long-term plans for your business.

4. Add a new business model

It isn’t just about how much you are paid when you have an effective M&A growth strategy. Additionally, a merger may offer new types of services, unlike what you already have. Therefore, developing and testing a new business model is easiest if you acquire a company that is already succeeding with the model. It reduces the chances of mistakes caused by inexperience.

5. Increased Market Share

One of the more common motives for undertaking M&A is increased market share. An obvious example is the banking industry. For the banking sector, an increased geographical footprint is the key to achieving market shares, and for this predominant reason, banks are frequently merged or acquired, nationally and even globally.

Key Takeaways

Business owners who want to expand their businesses often look to merge with & acquire similar businesses. Acquisitions enable a company to achieve rapid growth in a short timeframe.
Companies invest in M&A to gain control over assets, improve market share, and generate synergies within their various operations. Comparatively to traditional methods such as sales and marketing, this method is less costly, less risky, and faster.
A strategic merger or acquisition that maximizes synergies can be an effective means to assist companies in growing.

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