Mergers and acquisitions (M&A):

Mergers and acquisitions (M&A) are defined as consolidation of companies. Differentiating the two terms, Mergers is the combination of two companies to form one, while Acquisitions is one company taken over by the other. The reasoning behind M&A generally given is that two separate companies together create more value compared to being on an individual stand. With the objective of wealth maximization, companies keep evaluating different opportunities through the route of merger or acquisition.

Reasons for Mergers and Acquisitions:


• Financial synergy for lower cost of capital
• Improving company’s performance and accelerate growth
• Economies of scale
• Diversification for higher growth products or markets
• To increase market share and positioning giving broader market access
• Strategic realignment and technological change
• Tax considerations
• Under valued target
• Diversification of risk

Stages involved in any M&A:
1. Pre-acquisition review
2. Search and screen targets
3. Investigate and valuation of the target
4. Acquire the target through negotiations
5. Post merger integration

Some types relates to it:


1. Mergers & Amalgamations
2. Acquisitions & Takeovers
3. Demergers
4. Joint Ventures
5. Technical Collaboration
6. Deal Negotiation & Structuring