June 12, 2024
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Who Benefits from Mergers and Acquisitions?

Who benefits from mergers and acquisitions?

Though there are several reasons for mergers and acquisitions, the most popular one is the increase of profits. This goal may be achieved through different means – increase the number of sales, the territory of operation or the size of the average check via proposing more goods or services for the regular customers.

But there are unethical and unfair tactics that may be used for financial gains. For example, monopolies may set high prices for the goods if they control all the supply. This is the main reason for regulatory hurdles in mergers and acquisitions – the government has to step in and make sure that customers and industry itself would not be negatively influenced by the new company.

In order to ensure the best possible results of the merger or acquisitions specialists advice to reach out for a professional mediator, that is well-versed in the industry restrictions and regulatory practices. You also have to make sure that specialists have experience in your industry – for example, if you own a Tech or Internet-based company you should reach out to Valley Biggs for M&A advisory.

How do mergers affect participants and customers?

How does mergers affect participants and customers?

You can imagine that the merger of mid-sized and large companies would definitely have a great impact on the industry, but the acquisitions between small companies would also influence all the parties involved. Let us take a closer look at all the possible changes and find out who may benefit from the mergers and in what way:

  • Businesses. As we pointed out earlier the main reason to perform a merger is to increase the level of profit of the business. Usually the consolidation or the merger of several companies results in the new enterprise that is more profitable than the sum of the companies combined if they remain independent and separate. This synergistic effect is achieved by market share gains from M&A, economics on scale, implementing most effective sales and production practices and technologies.
  • Employees. Impact of M&A on employees depends on the character of the transaction and many different factors. For example, open and well-timed communications may drastically decrease the level of anxiety and fear of losing a job, just like increase of financial compensation, retirement benefits and stock-options may increase the motivation of the employees. Entrepreneurs have to maintain balance in between the necessary lay-offs and the motivation of the personnel that will become the part of the new team.
  • Customers. One of the unexpected beneficiaries would be the customers of such companies. Among customer benefits of mergers and acquisitions specialists can point out the increase of quality of the product – due to the use of new technologies and effective production practices, sometimes decrease in costs manifest itself via small price changes for the benefit of the customer, as well as new and exciting products from the same company with the same level of quality and care.
  • Management team. Beside the obvious changes in the management structure – instead several independent entrepreneurs have to appear a new management structure that would satisfy everyone and be effective in terms of productivity for the new enterprise. Also, some drastic changes may take place in the corporate culture – new enterprise, new responsibilities and new rules. That may be overwhelming at first and may affect the productivity of the company.

How can you maximize the positive effect of the merger?

How can you maximize the positive effect of the merger?

If you, as a business owner or a beginning entrepreneur, are looking for most efficient ways of spreading up the development of your business and increasing your profit, specialists recommend:

  • Look for complementary companies. Customers tend to purchase products and services from the companies that they already trust – try to find a company with a product or a service in the same industry or niche of the market.
  • Use every opportunity of economies on scale. After the acquisition or consolidation there is no need to save several marketing departments, sales departments or financial departments. 
  • Seek out professional help. Use the experience and advice of specialists of the M&A industry. These companies may consult you before the beginning of the merger process as well as manage the whole process. For example, tech and internet-companies tend to reach out to Valley Biggs for M&A advisory.

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