In today’s business climate that is competitive companies must acquire more assets and technologies in order to stay competitive. This is why the merger and acquisition market has been so busy this year. One of the main reasons for a company to engage in M&A is to increase financial resources. M&A involves a company buying another with cash, stock, debt assumption or a combination of these. The money acquired by the buyer can help it grow its operations or fund new products. It may also help gain access to distribution channels it would not be able to reach on its own.
Other motives for M&A include growing market share, improving brand image and diversifying product offerings. Facebook and other social media giants for instance, acquire apps targeted at certain demographics to increase their user base. M&A can also bring savings through economies of scale as well as streamlined processes. Additionally, M&A can allow companies to gain access to new markets quickly and benefit from tax advantages while doing so.
While M&A can be a great tool for growing a business, it comes with risks. It can lead to an entity dominating the market, which can result in monopolies. This is why M&As are usually subject to regulation by the government. M&As also have a tense relationship with geopolitical interactions. The study of M&As using a cultural economic lens can provide useful insights into the ways in which corporate power is transacted, transferred and defended within the changing geopolitics of economic geography.
