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What are the benefits associated with mergers and acquisitions?

When it comes to a company deciding to expand either domestically or internationally, many elect to either merge with or acquire new companies in order to give themselves a competitive advantage in the market.

Companies who merge with or acquire other ones often do so in an effort to increase their knowledge of an area of expertise that they lack. For example, one entity may be particularly well-versed in logistics, something that you, as the company looking to partner with them, may lack.

As the chief executive officer of your operation, you may find it to be in your company's best interests to partner with another a strong operational knowledge base in a particular industry to forward your own goals.

In some cases, there may even be an individual working for a particular organization that has specialized expertise in a particular field of inquiry.

By partnering with their employer, you may gain access to that individual's knowledge. This may, over time, give you an advantage over your competitors.

Aside from the aforementioned, mergers and acquisitions also often occur when one company is looking to limit the amount of money they are spending to fuel their expansion. In some cases, an underperforming company may willfully allow itself to be either acquired or merge with yours if it means that their facilities will be used on a more full-time basis than how it otherwise has been.

Some businesses also choose to merge with others in an effort to expand their market share or customer base. Others do so with the goal of diversifying their service or product offerings.

Companies to merge with or acquire other companies choose this option because it increases their purchasing power and reduces their overhead. Many businesses acquire other ones in an attempt to gobble up their competition or their valuable assets such as their intellectual property rights. Companies who do this often experience accelerated growth because of this.

If you're considering merging with or acquiring another company, then a St. George business organizations attorney can guide you through that process.

Source: Minority Business Development Agency, "Benefits of a merger of acquistion," accessed May 11, 2018

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