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Business Mergers And Acquisition Continued

Choosing The Right Business For The Merger/Acquisition


To create an increase in profit through a merger/acquisition, the target business will have to be chosen carefully. If a business is already successful/fully utilising its strengths, the potential for growth through the merger/acquisition will be less. There is a greater opportunity for profit growth if the target business has development needs including the following;

Mergers and Acquisitions Benefits

Mergers and acquisitions can yield a range of benefits including:

Reduced Employee Costs

Staff reductions leading to reduced costs, the number of jobs can be reduced to remove duplication of skills, expertise and experience.

Quality Employee Skills and Expertise

The company you have merged with (or acquired) may have skilled members of staff that will benefit your organisation.

Economies of Scale

As a larger organisation the business will find it easier to negotiate profitable deals with suppliers. This is because new contracts are likely to be larger than prior to the merger/acquisition, larger contracts give more negotiating power when dealing with suppliers.

Reduced Costs and Overheads

Duplication (caused by organisations trading as separate entities) can now be removed in all areas of the new organisation; this will reduce costs and overheads.

Reduced competition

As the two organisations are now part of the same business they are no longer competing with each other.


After the merger/acquisition the business may have access to customers, products and services not available to them prior to the merger.

Mergers and Acquisitions: What can go wrong?

Mergers and acquisitions can lead to a variety of problems, some can be avoided through careful planning and research but others cannot be foreseen. The following is a list of problems that can be experienced by companies involved in mergers and acquisitions.


Some businesses will undertake a merger/acquisition because they want to grow quickly whilst others may do it because they feel that they cannot survive in the marketplace without the support of another organisation. Whatever the reason the company chose for the merger/acquisition should be selected carefully to ensure that it will fit well with the existing business as mergers/acquisitions have both pitfalls and benefits.

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