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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.
It could be a strategy for growing business
Increasing market share
to come out of a stressful situation
1. Market Share
2. Reduce Competition
3. Get additional strategic technology
4. Grow the business
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.
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
