Benefits of Mergers and Acquisitions

Janek Pawlik is a resident of Franklin, Tennessee, and a member of the American Society of Mechanical Engineers. He has extensive experience in operations management and corporate development. An alumnus of the University of Michigan, Janek Pawlik understands mergers and acquisitions and why these transactions are important for businesses.

Mergers are transactions between two companies that decide to consolidate their assets to operate as a single legal unit. Acquisitions, on the other hand, involve a large organization absorbing a smaller business, including its assets and operations. Entities opt for mergers and acquisitions for several reasons.

Unlocking business synergies is one such reason. Through mergers and acquisitions, organizations can take advantage of economies of scale to produce and sell more units of their products. They can also combine their production capacities and sell their products to both entities’ customers. These strategies result in higher revenues and lower per-unit production costs.

Similarly, companies can diversify their operations after merging or acquiring entities. They can minimize risk by targeting businesses in other industries. This can insulate entities from weakness in one market, ensuring operations continuity and profit generation.

In addition, businesses can improve their workforce after merging or acquiring other companies. They can acquire employees with additional and specialized skills, and this can improve the entity’s productivity and competitive edge.