MCI mass capital investment logo is an international development institution specializing in financing and infrastructure development and investment.

Why does merging and acquisition happen between big companies?

Did you know that most giant companies have gone through at least one or two mergers and acquisitions to reach their current position? Rather, all giant companies are rushing to hire the most famous and professional employees to find attractive acquisition opportunities that push the company’s future forward!

At MCI, we have dealt with hundreds of companies in economic consultations, plans for purchases, acquisitions and acquisitions of companies, and the following are the most important benefits of mergers and acquisitions for companies:

  1. Increasing the company’s economic size a

Achieving a larger economic scale and size is the basis of all mergers and acquisitions activities. Easier access to capital, lower costs as volume increases, better negotiating space with distributors, as a general rule, large companies usually enjoy advantages that smaller companies do not.

  1. Reaching a wider range of clients

Mergers and acquisitions allow for enlargement of the customer base and thus economies of scale allow companies to benefit from the demand of a much larger customer base.

  1. Synergy

Synergies are often described as one plus one equals more than two: the value that comes from two companies working together is greater than the value of the two alone.

  1. More exposure to larger opportunities

The best deals occur when the company is not actively seeking an acquisition. A distinctive feature of such acquisitions is that the purchase price is usually less than the fair market value of the target company’s net assets.

These companies are often in financial straits, but a deal can be struck to keep the company afloat while the buyer benefits.

  1. Increase the market share

One of the most common motivations for conducting mergers and acquisitions is to increase market share.

  1. Higher levels of competition

The bigger the company, the more competitive it becomes with similar major companies. This is basically one of the benefits of size: being bigger lets you compete for more.

  1. Access to talented employees

Ask anyone in the recruiting industry what the biggest talent shortage is right now. Big companies attract talent easily, and in general this applies to all industries.

  1. Diversification of risk causes

This goes hand in hand with economies of scale: by having diversity in revenue streams, an organization can spread out risk, rather than having it focus on just one.

  1. Tax benefits

Acquisitions can sometimes bring tax advantages if the target company operates in a strategic industry or a country with a favorable tax system.

There are many benefits of good acquisitions, and the better the deal is done, the greater the benefits. To study your financial situation and the opportunities for purchase and acquisition, contact our experts at MCI through:

Leave a Comment

Your email address will not be published.

Scroll to Top