The Merger and Acquisition Market

The market for mergers and acquisitions is among the most dynamic and lucrative opportunities in the field of corporate finance. M&A is not a method that every company should implement however for those that can, it could provide tremendous growth potential. M&A transactions can be complex and require careful planning and execution to be successful. The M&A starts with an initial evaluation of the business. This could include high-level discussions between buyers and sellers to evaluate how the companies could strategically fit together, how their values align, and what potential synergies might be a possibility.

After the initial evaluation, a preliminary offer can be made to the target company by the acquiring firm. This could be done by way of an outright purchase or a tender. An outright acquisition is the acquiring company buying all shares of the targeted company. This is not involving the board of directors or the management of the company targeted.

A tender offer On the other hand, allows a publically traded company to directly reach shareholders of a publicly owned company and offer to purchase their shares for a price that is agreed on by both parties. This is a type of a hostile takeover and requires the approval of the shareholders of the target company before it can be finalized.

One of the main reasons for a company to consider M&A is the opportunity to gain revenue and synergies as a result of the merger of the two companies. For example If a car maker purchases a manufacturer of seat belts, it will be able to achieve economies of scale and reduce the cost per unit as production increases. Companies also make use of M&A to gain access to technologies that would be expensive or time consuming to develop internally.


Written by Jorje

Soy fundador de CeroTACC, un mundo #singluten que abrió sus puertas en el 2010 para construir un punto de encuentro para todos los celíacos de habla hispana. Pueden escribirme a [email protected]