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Mergers and Acquisitions: Drivers of Business Growth and Competitiveness


Integral service around a transaction
BY : adminFebruary Wed, 2023

The mergers and acquisitions or M&A, have emerged as a key corporate strategy in the business world. 

Today, many companies are engaging in this process to expand their market presence, strengthen their competitive position and gain access to new resources and capabilities.

Mergers and Acquisitions: Drivers of Business Growth and Competitiveness

What are mergers and acquisitions - M&A of companies?

M&A is an abbreviation in English that means "Mergers and Acquisitions" or, as it's called in Spain, mergers and acquisitions. This term is used to carry out a process when companies merge or are acquired through transactions.

The process generally involves transferring ownership of the company to another entity. In this regard, documentation in the form of Due Diligence (DD) is common. This entails a systematic review of the company, analyzing the business in detail.

What is a merger?

What is a merger?

A merger is a transaction whereby two or more companies decide to merge to form a single business entity. In this process, the companies combine their assets, liabilities and resources, and establish a new organizational and strategic framework. The main objective of a merger is to generate synergies that boost the growth and efficiency of the companies involved.

Benefits of mergers

Mergers offer a number of strategic and economic benefits for companies. Below, we will explain some of the main drivers that make mergers an attractive option for business growth and competitiveness:

1. Market expansion

Through a merger, companies can access new markets and expand their customer base. This geographic expansion allows them to take advantage of new business opportunities and increase their market share.

2. Operational synergies

By joining forces, companies can leverage operational synergies to improve efficiency and reduce costs. Combining resources and capabilities can generate economies of scale, optimize the supply chain and increase overall productivity.

3. Access to new resources and capabilities

Mergers provide companies with the opportunity to access resources and capabilities that were not previously available. This can include innovative technology, specialized knowledge, patents, trademarks, and other strategic assets that drive growth and competitiveness.

4. Risk diversification

By joining forces with another company, organizations can diversify their risks by entering different industries or market segments. This diversification reduces dependence on a single market and provides greater stability and resilience in the face of economic changes or market disruptions.

5. Strengthening the competitive position

A strategic merger can strengthen the competitive position of the companies involved. By combining resources and capabilities, organizations can increase their bargaining power, gain a competitive advantage in the marketplace and improve their ability to face competition.

What is an acquisition?

What is an acquisition?

An acquisition, on the other hand, involves one company gaining control of another existing company. In this scenario, the acquiring company purchases the majority or entirety of the target company's shares, thereby gaining control and ownership.

Motivations for acquisitions

Acquisitions also have their own motivations and strategic objectives. Below, we will explain some of the main reasons why companies choose to acquire other companies:

1. Market expansion and diversification

Acquisitions enable companies to expand rapidly into new markets or industry sectors. By acquiring an existing company in the target market, you can gain immediate access to its customer base, distribution and market knowledge.

2. Acquisition of technology or specialized knowledge

Sometimes companies seek to acquire companies to gain access to innovative technologies or expertise. This strategy gives them a competitive advantage and accelerates their ability to develop new products or services.

3. Consolidation and elimination of competitors

Acquisitions may be aimed at consolidating the market and eliminating direct competitors. By acquiring a competitor, competition can be reduced and the acquiring company's market position strengthened.

4. Leveraging economies of scale

Acquisitions can generate economies of scale by combining operations and resources. This translates into greater efficiency and the ability to reduce costs, which in turn improves the acquiring company's profitability.

5. Expansion of the product or service portfolio.

Acquiring a company with a complementary portfolio of products or services can enable a company to diversify and expand its offerings. This meets customer needs more comprehensively and can drive long-term growth and profitability.

How to achieve success in mergers and acquisitions?

It is common for companies to enlist the help of an impartial third party, such as an M&A consultant, to conduct proper valuation and due diligence. so that it is done in a safe and sound manner, benefiting both the buyer and the seller.

It is not uncommon for several parties to be involved in the process, such as the auditing firm, a lawyer and other professionals.

When transferring ownership of a company, it is crucial that the buyer gains a comprehensive understanding of the technical, legal, and financial status of the business, among other important aspects.

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Discover the path to business success with Baker Tilly! Our team of experts in mergers and acquisitions (M&A) is ready to propel your company towards new opportunities!

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Mergers and acquisitions can be powerful strategies for business growth, but they also come with significant challenges. To achieve success in this process, it is crucial to follow some best practices:

1. Strategic planning and in-depth analysis

Before embarking on a merger or acquisition, it is essential to conduct a thorough analysis of the companies involved. This involves assessing cultural compatibility, financial, legal and operational aspects, as well as potential risks and synergies.

2. Communication and change management

During the merger or acquisition process, it is critical to communicate clearly and effectively to all stakeholders. This includes employees, customers, suppliers and shareholders. In addition, change management plays a crucial role in ensuring a successful transition and minimizing resistance to change.

3. Effective integration

Once the merger or acquisition is complete, integrating the companies is key to leveraging synergies and maximizing benefits. This involves aligning systems, processes and organizational cultures, as well as optimizing the structure of the combined company.

4. Talent management

Proper talent management is critical in mergers and acquisitions. It is important to identify and retain key professionals in both companies, as well as to ensure that there is a clear organizational structure and well-defined roles. In addition, providing development and training opportunities will help to integrate and motivate staff during this transition period.

5. Continuous evaluation and strategic adjustments

After the merger or acquisition, it is essential to conduct an ongoing assessment of performance and results achieved. This will help identify areas for improvement, adjust the strategy as necessary and maximize long-term benefits.

In conclusion, mergers and acquisitions are powerful business strategies that can drive growth and competitiveness. By expanding markets, leveraging synergies, accessing new resources and capabilities, and strengthening competitive positions, companies can achieve greater success in an ever-evolving business environment.

Together, we can reach new horizons and ensure business success in the world of mergers and acquisitions! Baker Tilly Global Deal Advisory your M&A consulting firm.

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Our team of market analysis specialists is continuously analyzing the investments of the most active markets in the industry in order to unceasingly contribute ideas of the current market situation and identify the most relevant trends for senior management. We integrate the most relevant sources of information which allows us to discover the most interesting companies for venture capital and similarly helps us to identify the investors with the highest probability of involvement in an M&A process to ensure the success of our sell-side operations.

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IntelFin consists of a cognitive system, which, through the application of advanced analytical technologies, facilitates the automation of investment and financing decisions in the field of non-listed companies and especially SMEs in high-growth sectors.

The information related to these companies is characterized by their lack of transparency and heterogeneity; thus, it is necessary to develop an advanced analysis which is as much predictive as prescriptive and is developed in a natural language custom, suitable to obtain greater clarity and knowledge of the investment scope.

The IntelFin system focuses especially on analyzing the variables that define and influence the competitive environment of a sector and the positioning of a company, analyzing their influence on future value creation. Therefore, IntelFin supports strategic decision-making to senior management by resolving questions such as:

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