Companies merge to expand their market share, diversify products, reduce risk and competition, and increase profits. Common types of company mergers include conglomerates, horizontal mergers, vertical mergers, market extensions and product extensions.
What are the reasons for mergers?
The most common motives for mergers include the following:
- Value creation. Two companies may undertake a merger to increase the wealth of their shareholders. ...
- Diversification. ...
- Acquisition of assets. ...
- Increase in financial capacity. ...
- Tax purposes. ...
- Incentives for managers.
What are the two reasons for merger and acquisition?
Two reasons for mergers and acquisitions are to provide improved capacity utilization and to gain new technology. Engaging in the promotional activities, introducing new ways by which product value can be increased, which in turn increases the production rate which leads to maximum capacity utilization.
