All companies strive for growth and expansion. In general, there are two ways a business can grow, either through internal growth or through external expansion. Internal growth is driven by the company's regular growth trajectory, whether through the use of new technologies, asset acquisitions, better supply chain management, or new product lines.
This time, companies often need time to deliver results. Another way to grow is to consider the possibility of corporate restructuring. This can be achieved through various types of corporate actions such as mergers and acquisitions of companies.
External growth paths are popular with companies around the world because they help overcome trade barriers and build capital in different countries.
What is a merger or acquisition?
A merger or acquisition is one of the most significant corporate events for a company, a process that is forever etched in its history. In an atmosphere of increasing competitiveness, this strategy is common for small and large companies.
The intent behind such a move or decision is unique to each company but is based on the principle of creating more value (after the merger) than it costs each company individually.
The added value created from the merger or acquisition process is called synergy. As simple as it sounds, the whole process of merging, acquiring, to create synergies (financial gain) is daunting.