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Mergers and acquisitions (M&A)

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Mergers and acquisitions (M&A) combine two business entities into one. A merger occurs when the two businesses form a new, third entity. In an acquisition, one company purchases and absorbs the other into its operations.

The goal of a merger or acquisition is to create a new entity that is more efficient and effective than the two previous companies were on their own.

Mergers and acquisitions deliver financial benefits for the owners of the original companies and the owners of the newly merged entity. Some shareholders will cash out their stocks as part of the deal. Others will keep their shares and profit from higher dividends as the new company grows.

More about mergers and acquisitions

The benefits of mergers and acquisitions can be both strategic and operational.

Strategic benefits:

  • Deeper expertise and combined customer insights for better strategic decision-making
  • Improved products and services by combining existing offerings and developing new ones
  • A better client experience
  • Access to new geographic markets and a better ability to serve existing ones
  • A greater ability to attract top talent
  • Faster development and launch of new technologies
  • A better market position

Operational benefits:

  • Streamlined offers—a focused, consolidated set of products and services for the target market
  • Streamlined distribution—a single distribution network instead of two separate ones, with lower operating costs
  • More effective marketing and sales with increased reach, lower costs and stronger negotiating power
  • Greater purchasing power
  • Lower overhead through consolidated services
  • Scaled manufacturing

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