Mergers & Acquisitions
A merger and acquisition can be defined as one of two scenarios.
- A merger takes place when two companies come together as a single entity, whereby two companies agree to do business together.
- An acquisition takes place when one company looks to absorb another company and maintain control of the operations.
Both of these scenarios could seem similar in nature, but the main difference is whether each company maintains some semblance of control or where one does post transaction.
A merger technically revolves around two organizations understanding the whole is greater than the sum of its parts, and they come together deciding that they will merge operations because it will be a greater entity together, as opposed to operating opposed from one another. Although, all mergers do not always involve competing companies that are competitive in nature. Sometimes they are just two companies that have resources that fit a symbiotic relationship, and sometimes they are in two different industries, where each business can benefit off of the customers and prospects of the other by offering a wider range of services and products.
An acquisition is predominantly when a company or individual sees another company as a major benefit to their goals if they absorb it under their umbrella. A company can look to absorb a larger company or smaller company and bring it under its wing.
A company bringing a smaller company under its wing is generally easier. A larger company has more resources and more capabilities to encapsulate the strengths the smaller company has going for it, and they can mitigate many of the weaknesses the acquired company has. A smaller company acquiring a larger company is generally more challenging, as you will be caught by surprises and concepts that are foreign to the acquiring company. It is larger by nature, therefore it has more strengths and weaknesses than the acquiring company, and the lack of resources could prove to be a problem. A smaller company acquiring a larger company almost always will lose parts of the business because it cannot possibly sustain.
The goal of an acquisition and/or merger is to sustain and build upon what is already built that is functioning well. Things that are not functioning well, you want to shore up or cut loose in an efficient manner.
Contact information for help with your M&A deal:
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- difference between acquisition and mergers
- mergers & acquisitions
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Leader in Acquisitions with Expertise in Representing Sellers & Buyers on Deals
Jarbly is a leader in acquisitions with expertise in helping with listings, negotiations, LOI's, asset purchases, company purchases, and real estate purchases. JARBLY has access to high net worth individuals if you are on the sell-side and businesses that may be of interest to you if you are on the buy-side.