Many international and domestic companies go for merger and acquisition for business expansion in India. M&A leads to the company’s growth by enhancing its production and marketing operation. Merger and acquisition is an act of consolidating two or more companies with the purpose of business growth and increasing market share. There are several reasons for the occurrence of merger and acquisition, some of them are mention here:
Synergies
By consolidating two firms, we enhance its value and performance. In simple terms we can say, “One plus one makes two” and two have a higher value than one. Operating economics is the major benefit of the merger. Moreover, it also strengthens R & D facilities by improving managerial capabilities, better-organized production facilities and profitable investment etc.
Business Growth
A company may expand internally or externally. The merger can allow the primary company to grow its market share without doing any significant task. Further, growth leads to higher profits and an improvement in shareholder value. It accelerates growth in the most convenient, inexpensive and smooth manner.
Reduce Competition
Merger and acquisition let companies gain better distribution and network. In this case, a company wants to expand its business into a different market where another company is already working. Instead of starting from the beginning, they merge with another company to have a hold in the market. But in this case, the company needs to have a substantial premium to convince the targeted company. However, you can get in touch with global market entry and expansion solution providers like Tecnova to get things sorted and to convince the target company for M&A.
Cost Cutting
When two companies of the same industry, product or service merge, they can save a lot of money. They can merge the locations or reduce the operating costs by combining and streamlining support functions. Moreover, the integration of the two companies reduces the overall cost of production.
Replace Ownership
The company may wish to merge or acquired by another company in case the present owner of the company doesn’t have any successor or if he or she needs money to invest it in something else.
Diversification
Two companies who are dealing in different products and services can go for amalgamation to combine their product and services to gain a competitive edge over others in the market. As each of these companies is already dealing in their respective line, there is less risk in diversification as compared to when we start a new line as a fresher. Merging will combine their experience, which will further benefit their company.
Tecnova is a well-known M&A consulting firms in India, which can help you in the process of merging and acquisition. Merging can give you more business opportunities for advancement and access to resources and funds. This can be a great decision for survival and expansion.
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