CÔNG TY TNHH TƯ VẤN KIỂM ĐỊNH VÀ THIẾT BỊ ĐO LƯỜNG

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The merger and acquisition (M&A), market is an essential part of the growth strategy for many public companies. Large public companies with excess cash usually seek opportunities to acquire other companies to achieve inorganic growth. M&A is typically a merger of two companies within the same industry, with similar levels in the supply chain.

In general, a business may buy another for cash, stock, or even debt. The investment bank that is involved in the sale will sometimes provide financing to the acquiring firm as well (known by the term staple financing).

M&A starts with an evaluation of the target. This includes financial reports along with business plans, management plans, as well as any other relevant information. This process, called valuation, may be carried out by the acquiring firm or by consultants. Typically, the firm performing valuation must consider more than only financial information, like culture fit and other factors that affect the success of the deal.

Growth is the most frequent reason for a merger or acquisition. The addition of size to a business gives it economies of scale, which decreases operational costs and boosts bargaining power with suppliers of raw materials, technologies or services. Another motive is diversification which helps a business to withstand downturns that are cyclical or generate more steady revenue. Lastly, some companies acquire competitors to increase their standing in the market and eliminate future threats. This is often referred to as defensive M&A.