Guide to Mergers and Acquisitions

Investment Firms6Sometimes people use the terms mergers and acquisitions interchangeably. However, in the business world, these two words do not really mean the same thing. Although there are many similarities between these two business actions, there are also big differences between the two and if one is to understand these processes properly, one needs to understand the meaning by examining the terms separately.

IF there are two companies that are on equal footing, it is possible for them to merge. What this means is that the two companies are equally sized, and they have quite the same strength so, when combined or merged, one does not overshadow the other. Some companies pursue mergers on a mutual agreement basis which results in a combined company name. Mergers are very beneficial to the corporate world and to the companies involved. The reason for this is that the resulting company is actually stronger after the deal has been completed. Check out Eli Global Press or Eli Global for more details on mergers.

On the other hand, an entirely different story unfolds in the case of acquisitions. In this scenario the two companies involved are a large company and a smaller one. Here, the large company purchases the smaller company. This can also be called as a buyout or a takeover. In many acquisitions, the process is a friendly one. But, reality has also shown many hostile acquisitions. The reason for this is than if one company acquires another, many employees are laid off and terminated. The policies that used to be in place for one company can altogether be changed and considered worthless when the bigger company exerts power over the smaller one. In most cases, the small company loses its identity including its name and they have to continue on with the name of the larger company.

Companies that specialize in mergers and acquisitions understand this distinction and do their best to educate companies on the differences since both are acts of two companies becoming one. IF these mergers and acquisitions are to succeed, employees and executives need to understand the future roles of each company following the agreement. Even if the acquisitions is hostile, employees may even end up in a better situation than their previous situation. There is more success for a smaller company that has been bought by  a larger one. This is because large companies have stronger  financial resources and marketing.

If people understand the true nature of mergers and acquisitions, growth and prosperity can follow. Continue reading more business tips here:


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