The merger and acquisitions market is one of corporate finance’s most active and lucrative markets. M&A is not a method that every company should implement, but for those who are able to, it offers enormous growth business vdr potential. M&A transactions can be complex and require careful planning and execution in order to be successful. The M&A starts with an initial assessment of the business. This can include high level discussions between sellers and buyers to see how the companies could be integrated strategically in terms of their values, and what potential synergies may exist.
Once the initial review is completed, the acquirer can make a preliminary offer to the company that it is interested in. This can be done through an outright acquisition or a tender. An outright acquisition entails the acquirer purchasing all shares of the company being targeted. This is not involving the board of directors or management of the company targeted.
A tender offer permits an publicly traded company to contact the shareholders of a privately held company and offer to purchase their shares at a price that is agreed on by both parties. This is a kind of a hostile takeover, and requires the approval by the shareholders of the company being targeted before it can be finalized.
One of the main reasons for a company’s pursuit of M&A is the possibility to gain revenue and synergies by combining the two companies. If a car manufacturer purchases a seat belt manufacturer, it can benefit from economies of scale that will reduce the cost per item as production grows. Companies also make use of M&A to gain access to technology that would be expensive or time-consuming to develop internally.