Companies all over the world strive for objectives that remain common across industry and geographical boundaries. Expansion in the volume of business, improvement of bottom-line, increase in profits and more dividends or interest to shareholders and creditors, these business objective are a part of every company’s mandate goals. A company can achieve expansion through organic growth which entails opening branches, but this process is lengthy and it could take the company a few years or decades to reach the desired business objectives. Mergers & Acquisitions are another way to achieve expansion goals and it is much faster. Generally a company which is bigger and financially more stable, acquires a smaller company. The smaller company is the merged company, most often than not it ceases to exist after the completion of the acquisition process. Although this may not always stand true, in some companies, despite two companies entering in a merger & acquisition deal, both companies retain their identity operating on mutually agreeable business objectives.
Besides the advantage of achieving faster expansion goal, there are many other advantages of Mergers & Acquisitions. The acquiring company gets an established infrastructure in terms of production and operations or service standards. It gets access to the customer base of the acquired company. The existing suppliers and channel partner network also becomes accessible for the company, therefore the acquiring company doesn’t need to put in effort in creating suppliers, dealers and channel partner network. After completion of the merger, both companies can take advantage of a larger and collective bargaining power and economies of large scale operations.
The process of Mergers & Acquisition could be quite a handful for both companies due to the quantum of legal and other procedures to be complied with. It involves lot of documentation, lot of regulatory compliance, lot of legalities and procedures, lot of permissions, lot of time and man-hours. There are specialist financial service providers like Chartered Finance Management Limited (CFML) which have a strong expertise in handling and executing the process of Mergers & Acquisition.