Pacific Mergers and Acquisitions Inc. will facilitate transactions where two or more companies are merged into one, possibly capitalizing on synergies, strategic objectives, and more. Growth by Acquisition and Strategic Aggregation is becoming more and more popular and on both a national, and a cross border, international level.
The objective is to create value, as a result of synergies between the companies being merged, where economies of scale or economies of scope can be effectively utilized to create value as a result of synergies between the companies being merged and leverage such activities as sharing or transferring of competencies, or sharing infrastructure and more.
Typically, in a Merger, two or more companies become one company, and one of the management teams, or a combination of the merged companies’ teams becomes the new or dominant management team.
There are multiple reasons for merging companies, where the objective and result is to create value as a result of synergies between the companies being merged, and where economies of scale or economies of scope can be taken advantage of such as sharing or transferring of competencies, or sharing infrastructure and more.
Strategic buyers can be private companies or public companies. In the case of public companies, the financial scrutiny might be higher than private companies; however, in either case, such matters as due diligence requirements, level of financial reporting and quality of earnings assessments must be considered.
Such potential buyers can be outside unrelated entities, suppliers, or customers that may be strategic or synergistic. They may also be competing entities or industry buyers with strategic or synergistic focus and/or results. Finally, they may be product or market extensions where complimentary products are key, and strategic objectives are often desired.
Common Reasons for a Merger
A merger’s purpose may be for multiple reasons:
Vertical Integration
Upwards or downwards on a supply chain. An example might be the acquisition or merger with a company involved in different stages of the same production process. For example, a company that manufactures aluminum windows might vertically integrate by buying a company that manufactures aluminum extrusions. Such would allow the window manufacturing company to have more control over its supply chain and possibly even reduce costs.
Horizontal Integration
Horizontal integration occurs when a company expands by acquiring or merging with a company/business that operates in the same stage of the production process. For example, if that window manufacturer acquires another window manufacturer such as perhaps a vinyl window manufacturer, this would be considered a horizontal merger or integration. Such a strategy might help companies to increase market share and or reduce competition.
Another such horizontal merger might be the acquisition of a straight competitor thereby increasing one’s market share, growing the acquiring company and eliminating some competition.
Have a Private Confidential Conversation with our professionals at Pacific Mergers and Acquisitions to see if your company or business might be a potential candidate for a strategic or synergistic buy, in the form of a merger.