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What are some reasons companies carry out mergers?

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Question added by Shahbaz Hayder , Group Head of Finance , Sharif Group of Companies
Date Posted: 2015/04/27
Surender Sajwan
by Surender Sajwan , Corporate Development Manager , Premier Auto Solutions

1. Synergy: Looking for synergy in order to improve performance and reduce cost. Moreover, an entity in order to merge with another entity is looking for complementary strengths and weaknesses.

2. Diversification: Diversify in unrelated business/segments. In that case, entity will be looking at market leader in that particular business/segments in order to penetrate the market and become market leader.

3. Growth: Merger can give an entity a respectable market share without putting much an effort into it. Instead of buying a competitor´s business for a fair price.

4. Eliminate Competition: Increasing market share by acquiring competitors business in its segments. However, this requires convincing the target company shareholders for possible benefits from the deal.

Vineet  Shrivastava
by Vineet Shrivastava , Consultant , BSA Ahmed Bin Hezeem

It could be a strategy for growing business

Increasing market share

to come out of a stressful situation

Atanu BARUAH
by Atanu BARUAH , Vice President and General Manager , AerCap

1. Market Share

2. Reduce Competition

3. Get additional strategic technology

4. Grow the business

Mohammad Hussein Aldweek
by Mohammad Hussein Aldweek , General Manager , Invent Information Systems

1- To add more capabilities to the organization in a less costly way than starting it from scratch.

2- To kill competition.

3- To expand geographically.

4- To reduce cost.

Mayank Shah
by Mayank Shah , Practicing Chartered Accountant based in Mumbai , Mayank P Shah & Co

There are multiple reasons for the same: 

To have more market share

To have better cost efficiency removing duplicate common cost

To have better negotiation terms with supplier 

 

 

 

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