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. M&A is one of the major aspects of corporate finance world. The reasoning behind Merger and Acquisition 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.
Mergers & Acquisitions can take place:
- by purchasing assets
- by purchasing common shares
- by exchange of shares for assets
- by exchanging shares for shares
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
Why We?
We at PBS India advices our client on Mergers & Acquisitions to optimize its objective.