Do you agree that merger and acquisition is necessary for a business to grow?
- YES, merger and acquisition is necessary for a business to grow. This is because when entering into a merger and acquisition, the span or covergae of your business will also expand to a larger scope thus, allowing to have wider market for your product and services and gaining more profits. This is a sort of a joint agreement of two companies to work as one to widen their market and increase their exposure to the consumers.
Explain the difference of merger and acquisition.
- Merger is a combination of two business organizations to form into one new business entity. The entities of the two organizations are combine for a joint task agreement.
- While Acquisition is a takeover of one organization by the other organization and incorporate it to their operation. An example for this is when a company buys another company and included it in their existing operation to expand their business.
Provide 2 scenarios wherein merger is required for a company and explain your answer.
- When two business competitors sharing the same market and planning to increase the wealth of their shareholders they can decide to jointly form a new business entity to expand their market thus increasing their revenues.
- When the company faces financial constraints, they can opt to have a merger with another company to have a partner in the financing and capital expenditures of the business.
Provide 2 scenarios wherein the best move for a company is to acquire another business and explain your answer.
- Acquisition can be done when there is a competitive business organization that is risky to the long-run of your business and you are sharing withthe same market, you can negotiate to buy their company and acquired the competitor's business to eliminate competition in the market share.
- When there is business that is going to be in a bankruptcy, you can acquire it since there will be a lesser acquisition cost and this will be your opportunity to expand in the market or explore other type of business.