What Are the Major Factors That Drive Mergers and Acquisitions?

Many factors can motivate mergers and acquisitions – here are some:

  • Diversification is one factor that motivates mergers to expand in new directions by diversifying the range of products and services offered. Such a merger is beneficial for both parties to the transaction by giving each of them accesses to new markets and more opportunities to generate revenue;
  • Asset acquisition – another frequent motivation that informs mergers is the need to acquire new technologies or other assets that would be otherwise difficult to obtain, or that would take a very long time to obtain;

M & A business advisors

  • Value creation – the opportunity to create a new business entity, the value of which exceeds the cumulated value of the two companies entering the deal is another prevalent motivation for mergers. Knowledgeable M&A business advisors confirm that these transactions can take the form of revenue synergies that improve the revenue-generating ability of the new entity compared to the two merging entities or cost synergies that reduce the costs generated by the activity of the new entity;
  • Increasing financial potential – a merger can also be motivated by the need to increase financial capability by making the newly established company eligible for more substantial credits.

The post What Are the Major Factors That Drive Mergers and Acquisitions? appeared first on iKadre.

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