A business merger occurs when two companies with complementary strengths join forces to form a larger organization with greater market reach and financial power. A company may choose to merge for a variety of reasons, including increasing its brand visibility or acquiring valuable intellectual property. However, carrying out a merger requires careful consideration of both the pros and cons of this business activity.
When companies are considering a business merger, they often engage M&A consultants to conduct due diligence to ensure the deal is financially viable. This process typically includes interviewing employees, analyzing data and conducting market research. Once the due diligence process is complete, the company can begin discussions with potential partners and finalize a deal.
M&A can help businesses achieve economies of scale by consolidating resources, reducing duplication and eliminating redundant functions. Additionally, it can provide them with a bigger bargaining power when negotiating contracts with suppliers or customers.
Another benefit of M&A is access to an acquired company’s best practices. This might include an efficient onboarding process, a superior CRM system or a leaner operations model. However, it is important to evaluate whether the expected synergies, such as cost savings and revenue growth, are realistic and feasible.