What are the rational motives of business acquisition?

Mainly, it should be quite clear that acquisition process will not succeed unless the organization has a declared ”Acquisition Strategy” pointed out by the board and also be approved by the shareholders.

Then to rationally motivates any business acquisition transaction senior management should have a very detailed study to be sure that the transaction in question is:

1-       Adapted and matched with the origination’s acquisition strategy.

2-      The transaction will extend the organization’s market-share, add new products, technology, or minimizing total costs ( all or part of these items).

3-      Bearing a new business or industry model.

4-      Will drive the organization’s stocks up to the expected calculated value.

Profit Maximization and Loss Minimization!

The two simple reasons are, gaining more money and acquiring more power. Benefits are:

• eliminate competition.
• gain more customers, especially competitor's customers.
• reduce running costs.

All this leads to increase in profits, which is the main reason behind starting a business.

Thanks for your invitation, Agree on experts.

Rational motives of business acquisition are:

• Fill a void in a portfolio: the objective may be to acquire the product that lacks structure to meet customer needs in a determined area, or to use the ability of a distribution channel,
• In invest surplus: invest a surplus is often the result of underlying growth in the periods that see self-financing margins of the companies recover,
• Strengthen a business unit: the acquisition may be a competitor, supplier, a new distribution channel or a new technology,
• A fourth mobile that is irrational in terms of business but still extremely common, namely the desire deep to build an empire.

Thank you for this question. I will be completely honest with you because I don't like the copy-paste from the internet answers. This subject is one where I don't have a practical experience. So I will leave it open. Best ragards,