A business merger is the legal joining of two companies to create a single, new business entity. It can be a “friendly” merger, benefiting both companies equally, or it can be a “hostile” acquisition that benefits one company more than the other. However, true mergers are rare; most consolidations are actually acquisitions (though some are mislabeled as mergers).
There are several reasons for businesses to pursue M&A, including: Economies of scale: combining two companies can lead to cost savings and efficiency through streamlining operations, eliminating duplicate functions, and redeploying resources. Diversification: M&A can enable a company to diversify its products and services, which may be beneficial in industries susceptible to cyclical fluctuations or economic volatility. Enhanced bargaining power: a combination of companies can provide greater buying power with suppliers, customers, and competitors.
M&A is often complex and time-consuming. The companies involved must work together to find areas of overlap and common-ground. They also must ensure that their employees, customers, and suppliers are on board with the transition.
While M&A is a great way to improve your business, it’s important to weigh the pros and cons carefully. Consider consulting a Milwaukee mergers and acquisitions attorney to help you decide whether a merger is right for your business. Interested in learning more about M&A? Take a look at Forage’s Investment Banking Skills Passport.