It is the dream of every corporate CEOs and manager to attain a profitable growth along with innovations and real-life insights. They give their best efforts to increase their earnings per share over time.
They are free to adopt any of the below-mentioned approaches for attaining their goal.
- Organic method: This approach involves
- Either creating a hike in existing divisions’ sales while maintaining proper operational margins or cut-offs.
- Or, increasing the marginal level of operation while supporting sales.
- Mergers and Acquisitions:
- This approach seeks to merge a corporation with another one of the same kind resulting in larger industry size and enhanced earnings based on its working labor.
- This is more advantageous than the organic one.
A merger can be correlated to the aspect of corporate strategy including management and finance dealing with the buying, selling, portioning and joining different companies under similar entities. The idea of merging comes with the unique feeling of accomplishing something that is assured when together rather than doing it by themselves. When a company proceeds to merge with another one of approximately similar or large type, the whole operational unit comes together and work for the same goal.
An acquisition, on the other hand, deals with the real purchase of a business firm by another company. They are stated as private and public based on their listing on the public stock market.Such a type of transaction results in the complete transfer of ownership together with its total control.
Even though the word Merger&Acquistion binds together, there is some major difference existing between the two respectively
- Merging can still retain the name and brand while these are lost in the acquisition.
- The first kind promises mutual benefiting to the companies whereas the second type involves savings from the loss.
- Additionally, all the corporate features and employee behavior are well-maintained in merging but these are never a consideration factor in the second type.
- Moreover, assigning of responsibilities is possible but there occur confusions regarding the leadership in the merging type. However, both payroll and duties are never distributed in acquisitions.
The main objectives of M&A include
- Acquiring a large portion of the economic market share and thus the way to grab more patent rights and totally free from a tedious and competitive world
- Desired to enjoy the monopoly over the trading activity
- Adopting and adapting to the modern technologies
- Ability to achieve synergy and diversification
When a company takes a stand to acquire or merge the final output of profit or loss is entirely dependent on its planning strategies.