Mergers and Acquisitions

Mergers and Acquisitions

Get to know the difference between the processes.

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Ways of expanding companies

Mergers and acquisitions or M&A are forms of company expansion, which, in addition to financial returns, allow for market strategies and efficiency gains.  

What is Merger?

In the merger, the mutual consolidation of two or more companies occurs to form a new organization.  In this process, operations are integrated with ownership, control, and profit sharing. The shareholders of the old companies participate in the new one.
There are 5 different types of fusion:
Horizontal fusion: It occurs between companies in the same segment, that is, competitors;
Vertical fusion: It is the combination of complementary businesses;
Conglomerate: It occurs when companies are from unrelated market segments;
Market extension merger: It occurs when companies produce the same products in different markets. 
Product extension merger: It happens to companies that have related products in the same market.

What is Acquisition?

Acquisition is the purchase of the control of a company by another organization, and the acquired company ceases to exist.  The company that acquires another is more powerful in terms of size, structure, and operations. There are two types of acquisition:
Friendly acquisition: the executives of the target company support the acquirer in the process and see the operation positively;
Hostile acquisition: the purchase of the majority of the capital of a target company in the open market against the will of the Board of Directors of the company to be purchased.

How to conduct a merger or acquisition process? 

Some steps are essential in this process, such as defining responsibilities, carrying out an audit, and knowing the legislation of the places involved.

Definition of responsibilities
Delegating tasks to each person involved in managing the merger or acquisition is critical to the success of the merger or acquisition, as both processes involve structural and cultural changes.

Perform audit
Performing legal and accounting auditing is essential to identify possible risks and to have a complete structural, accounting, and legal view..

Know the local legislation
For the process to take place, it is necessary to comply with local legislation so that all the necessary procedures are adopted in accordance with the established laws.

Advantages 

Competition reduction.
Potential growth.
Opening new markets with sharing of know-how.
Time savings in the growth strategy.

Disadvantages

Loss of existing strength of the brand on the market.
Adaptation to cultural change.
Repositioning in the market.


Count on moneycorp for the entire exchange process for mergers or acquisitions. Get in touch with our experts.  

Note: This content is not intended as advice or any form of investment.  Merely informative content.

 

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