What is better for the business: mergers or acquisitions?

Successfully developing companies sooner or later face the need to expand the market. The most popular ways to achieve large-scale goals are mergers and acquisitions.

Practice shows that not all such transactions are successful, part of the market share is most often lost. In order to avoid losses and not be overwhelmed, it is necessary to carefully consider the merger plan and choose a transaction mechanism.

A merger is understood as the merger of two or more companies, as a result a completely new organization is formed, it is she who takes on all the assets and liabilities of its components. Mergers can also be made by type of merger. In this case, one of the companies remains, and the rest ceases to exist, transferring all the rights and obligations of the surviving company.

Another way of combining is the takeover of organizations. At the same time, smaller companies become structural units of a larger one, ending their autonomous existence as taxpayers.

The merger is best suited for peers with approximately the same market position. At the same time, a new company with a new name and brand is formed. The merger may be the need to create a new organizational structure for all participants. It is very important to think about branding issues. It can be a joint brand strategy when the new name is a combination of the brands of two companies, for example, AOL-Time Warner or Daimler-Chrysler. Or a flexible branding strategy, when each company is known in its geographic region. For example, the merger of Renault and Nissan in Europe uses the name Renault, and in America - Nissan, the changes can be detrimental to the brand.

When acquired or acquired, the seller’s brand is most often completely lost. In order not to lose customers and market share, it is better to takeover gradually. The main thing for the buyer in this case is to obtain the capacities and capabilities of the company to be joined. It completely loses its independence, cannot influence the main strategy of the united enterprise. Most often, the structure, corporate culture, ways of motivation and encouragement of employees of the absorbed organization are changing.

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