M&A is a crucial part of the corporate world, and online M&A transactions are growing in frequency. When a merger or acquisition occurs two companies will join to form one entity (merger) or try this site buy the other entity from its current shareholders and take control of its operations (acquisition). Both kinds of M&As have significant financial implications. M&As are often undertaken by businesses to reap the benefits of economies of scale and synergies. This allows them to save money in redundant resources, such as manufacturing plants branches and regional offices, research projects, and so on. The savings generated by these savings in costs flow directly to the bottom line and are known as an accretive acquisition.
Other motives for M&A are strategic and competitive like gaining access to new technology or capability, or expanding into new markets. The direct-to-consumer mattress seller Purple for instance was recently purchased by Cisco for $1.1 billion. These deals are typically more attractive to investors than an equity deal, which involves the investor buying shares in the company being acquired and then owning them long-term.
With the coronavirus pandemic still in the process of being cured, M&A activity may be dampened somewhat in the near future. Buyers will have to weigh the advantages of a deal versus the risks and costs, as well as internal reasons for making an acquisition are likely to be more convincing. Third-party consents are also difficult to obtain, for example from customers or intellectual property licensors. M&A valuations are harder to determine because of the coronavirus outbreak, and the popular saying “getting everyone together in the same room” is not feasible right now.