How A Merger and Acquisition Can Be A Response to Changing Economic Conditions
Changing economic circumstances can make it difficult to survive even for long-established, previously stable, and profitable businesses. What seems a great business environment one day can start plummeting tomorrow, leaving many businesses with no other option, but to merge with another business or to be acquired by one.
I was researching how do I sell my business, and I found out how a merger and acquisition transaction can provide a solution:
- How a merger can help – with a merger, two companies decide to join forces and move forward forming a new business entity. The new entity is created to preserve the qualities of both companies, the new unit benefiting from the market share and potential of both merging entities;
- How an acquisition can help – acquisitions are transactions in which one business entity buys the other. The decision can be motivated by many considerations on either side: the company that is being bought might have met a roadblock that makes it impossible to move forward in any other way, while the company that is making the purchase might be motivated by the need to expand their activities into new directions or by the need to have access to technologies or solutions that might otherwise be too difficult to obtain through other methods.