What Are the Major Factors That Drive Mergers and Acquisitions?


Many factors can motivate mergers and acquisitions – here are some:

  • Diversification is one factor that motivates mergers to expand in new directions by diversifying the range of products and services offered. Such a merger is beneficial for both parties to the transaction by giving each of them accesses to new markets and more opportunities to generate revenue;
  • Asset acquisition – another frequent motivation that informs mergers is the need to acquire new technologies or other assets that would be otherwise difficult to obtain, or that would take a very long time to obtain;
  • Value creation – the opportunity to create a new business entity, the value of which exceeds the cumulated value of the two companies entering the deal is another prevalent motivation for mergers. Knowledgeable M&A business advisors confirm that these transactions can take the form of revenue synergies that improve the revenue-generating ability of the new entity compared to the two merging entities or cost synergies that reduce the costs generated by the activity of the new entity;
  • Increasing financial potential – a merger can also be motivated by the need to increase financial capability by making the newly established company eligible for more substantial credits.

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