Join Tim Galpin for an in-depth discussion in this video About M&As, part of Mergers and Acquisitions Foundations.
- Mergers and acquisitions get everyone's attention in any organization, large or small. Let's start by understanding in general what M&As are and why firms pursue them. Mergers and acquisitions include all aspects of organizations, such as, strategic management, corporate finance, human resources, information technology, operations, legal, sales and marketing, and research and development. M&As deal with the buying, selling, dividing and combining of companies that can help an enterprise grow rapidly in its business sector, enter new geographies, or gain new products and services.
Mergers and acquisitions result in some reorganization with the key goal of creating growth and positive shareholder value. Industry consolidation happens when widespread M&A activity concentrates the resources of many companies within a particular industry into a few larger ones, such as we have seen in the banking, pharmaceutical and technology industries, for example. The distinction between a merger and an acquisition has become blurred in various respects, especially when it comes to the ultimate goal of creating shareholder value.
However, the difference has not completely disappeared in all situations. From a legal point of view, a merger is a legal consolidation of two companies into one entity, whereas an acquisition occurs when one company takes over another company and completely establishes itself as the new owner. Either structure can result in at least some consolidation of the two entities' people, processes and systems. This is why integration is so important for creating the value that is expected from mergers or acquisitions.
So, doing M&A integration well creates that value.