Mergers & Acquisitions
Mergers and Acquisitions
Mergers and acquisitions, often abbreviated as M&A, is a business financial process. It involves combining existing entities or acquiring new ones to form a new entity. It is a costly affair and often involves millions and billions of dollars. Depending on the circumstances of the business transaction, mergers and acquisitions may either be friendly or hostile.
Businesses may require restructuring in order to maximize their financial potential or to rid their business of a structure that may no longer be profitable. Mergers and acquisitions are the most basic way to bring about the restructure.
A merger is the coming together of two businesses in order to become a single strong entity. In contrast, when a business sells off a branch or division to another to become more profitable, or a business acquires a new division to pursue growth in that area, it results in an acquisition.
There are numerous benefits involved in the process to all the involved parties. It can help a business survive by supplementing it with additional support and income. It can also result in the streamlining of businesses by bringing down the duplication of activities and expenses, thereby resulting in cost efficiency. Furthermore, new markets may be thrown open and competition may even be minimized.
Investment bankers and financial advisors may help business organizations in mergers and acquisitions. Larger conglomerations may even have entire divisions dedicated to the tasks of investigating and proposing mergers and acquisitions that will benefit their companies and shareholders. It is their responsibility to outline the risks and benefits and handle the process of negotiation.
Businesses for Sale
A business may be sold for various reasons. Some of them may be that the business owners have decided to retire, are looking to start a new business with better prospects, or are trying to avoid an imminent financial disaster such as foreclosure or bankruptcy.
Business valuation is a set of procedures and processes that help to estimate the economic value of the owner's interest in a particular business. It comes in handy to resolve disputes involving divorce litigations and buying and selling agreements besides many other legal and business purposes. Depending on the choices made for the premise and standard of business value, the net outcome may vary considerably. Business valuation is extremely beneficial for struggling businesses who are trying to sell as well as to those who are trying to acquire new businesses.
Business brokers are individuals or firms who act as intermediaries between buyers and sellers of businesses. Business brokers are also referred to as business transfer agents or intermediaries. They help sellers and buyers conduct the process in a smooth manner. They are usually associated with the process involving selling and acquisition of small privately held businesses.
From estimating the value of the business and putting up the sales advertising, to conducting the initial negotiations and discussions and providing general assistance, business brokers take care of all the major responsibilities associated with the buying and selling of businesses.