Merger and Acquisition

MERGER AND ACQUISITION
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Merger can be defined as the combination of two companies in order to form one new company while acquisition involves purchase of a company without forming a new company. Most companies opt for mergers in order to sustain and grow profitability standards and minimize expenses incurred in operations, re-current wages and transactions. Entrepreneurs know that two companies functioning as one will have the capacity to exploit new economies of scale, raise more funds for capital and minimize losses. In this case, there are various reasons why companies are performing relatively well as a result of mergers and acquisitions.
Increased capability resulting from in depth research and more advanced production systems and machinery. Companies merge in order to minimize production and manufacturing costs (Faulkner 2012). Combined companies also enjoy new exciting capabilities which may result from unique and advanced technology introduced by one of the companies.
Competitive advantage in the market space (Faulkner 2012). This h...