The Merger and Acquisition Market

The market for mergers and acquisitions is among the most exciting and lucrative opportunities in the field of corporate finance. M&A is not a strategy that every business can implement however for those that can, it could provide tremendous growth potential. M&A transactions can be complicated and require careful planning and execution in order to be successful. The find more M&A starts by evaluating the business. This may include high-level talks between vendors and buyers to assess how companies could strategically work together.

After the initial assessment is completed, the acquiring company can make a preliminary offer to the firm it is targeting. This can be done either through an outright acquisition or a tender. An outright acquisition involves the acquirer buying all shares of the targeted company. This is done without the board directors or the management of the company being targeted.

A tender offer allows an publicly traded company to reach out to shareholders of a privately held company and offer to purchase their shares at a cost that is agreed by both parties. This is a kind of a hostile takeover that requires the approval by the shareholders of the company being targeted before it can be completed.

One of the main reasons for a company to consider M&A is the possibility to reap revenue and cost synergies as a result of the merger of the two companies. If a car maker buys the seat belt business they can benefit from economies of scale that will lower the cost per item as production grows. Companies also use M&A to gain access to technology that would be costly or time consuming to develop internally.