Strategic Mergers and Acquisitions
EZB Consulting’s Strategic Mergers & Acquisitions will review possible opportunities to merge or acquire, taking full advantage of economies of scale or other important efficiencies. We will advise on how to create synergies by creating market power or demand price concessions from their suppliers.
Strategic Mergers & Acquisitions are the strategic activities firms undertake that involve buying, selling, dividing, and combining companies in order to facilitate the growth of an enterprise.
Potential Reasons for Strategic Mergers & Acquisitions – Individuals and firms pursue mergers and acquisitions for a variety of reasons. Here are a few of the most common:
- To Create Market Power – Firms may pursue M&A activity in order to consolidate the industry for the purpose of eliminating competition, or acquiring market share, or perhaps raising prices.
- To Create Synergies – One firm may seek to merge with or acquire another in order to realize synergies. Synergies include achieving better or more efficient utilization of resources, gaining economies of scale, and reducing costs. These are some of the greatest advantages to being a larger firm.
- To Make Changes in Management – A merger or acquisition may present an opportunity to restructure the company or change how it does business. It may permit stakeholders to discipline incompetent or corrupt management.
- For Finance-Related Reasons – Internal capital markets – Larger firms may be able to provide their own funding for business opportunities, rather than approach outside investors. A firm interested in developing a new product, for example, may be hesitant to share confidential information with investors, risking a leak of information to competitors. Self-funding the product eliminates that risk. Closely related, bringing a firm with research and product development capabilities in-house may preserve secrecy.
- Diversification – Some firms use M&A to diversify. The reasoning behind this may or may not be sound. If a firm is interested in making itself appear more attractive as an investment option, then diversifying through M&A is probably not a good approach. Though it is true that investors like to hold a diversified portfolio, this doesn’t mean a conglomerate is of greater interest to investors than individual firms would be, separately. After all, investors are free to assemble diversified portfolios themselves. However, a firm may seek to diversify for other, better reasons. If a firm were to form a conglomerate, the individual firms could take advantage of internal capital markets.
We will independently review and analyze your potential benefits of any potential Strategic Mergers & Acquisitions opportunities. We have extensive experience in positive benefits and negative drawbacks.