Mergers and Acquisitions 

What are mergers and acquisitions?  

Mergers and acquisitions (M&A) refer to strategic business activities involving the consolidation of two or more companies through various transactions. 

Generally, these are pursued as strategic approaches to expand an organization’s market presence or enhance their competitive advantage. In a merger, two or more companies merge their operations and assets to form a new entity, while in an acquisition, one company purchases another and integrates it into its existing structure. 

M&A activities can range from small-scale deals involving startups to large-scale transactions between multinational corporations, and they play a significant role in reshaping industries, fostering growth, and restructuring businesses. 

Why do businesses pursue mergers and acquisitions?  

Mergers and acquisitions are pursued for a variety of reasons, including corporate growth, enlarging the product range, developing new markets, or expanding a company’s leading position.

Why are mergers and acquisitions important?  

Mergers and acquisitions (M&A) play a crucial role by providing opportunities for companies to strategically grow and expansion or to withstand market disruption. By merging with or acquiring other businesses, companies can enter new markets, gain access to new technologies, diversify their product offerings, or enhance their competitive position. This strategic growth allows organizations to capitalize on synergies and economies of scale, leading to increased market share and improved profitability. 

Secondly, mergers and acquisitions can drive innovation and foster industry advancement. When companies combine their resources, expertise, and intellectual property, they can accelerate research and development efforts, streamline processes, and create new products or services.  

M&A transactions often bring together complementary strengths, allowing companies to leverage each other's capabilities and generate new ideas. Additionally, mergers and acquisitions can help revive struggling businesses or industries by injecting fresh capital, management expertise, and operational efficiencies. 

What is an M&A strategy?  

An M&A strategy involves careful evaluation and selection of target companies, negotiation of terms and conditions, due diligence, and post-transaction integration. The objectives of an M&A strategy can vary widely, including expanding market share, accessing new markets or technologies, diversifying product portfolios, achieving economies of scale, or eliminating competition.  

Successful implementation of an M&A strategy requires comprehensive planning, effective execution and change management, and the ability to navigate regulatory and legal considerations. 

What are the advantages of mergers and acquisitions?  

Mergers and acquisitions (M&A) offer several advantages for companies seeking strategic growth and competitive advantage.  

• Provide opportunities for companies to expand their market presence and gain access to new customer segments, tapping into new markets, expanding their geographic reach, and diversifying their customer base. 
• Increase their market share and revenue potential, while also reducing dependence on a single market or product.
• Improve productivity, streamline processes, and reduce expenses, resulting in higher profitability, improved cash flow, and enhanced overall performance. 

What are the disadvantages of mergers and acquisitions?  

While mergers and acquisitions (M&A) offer numerous benefits, there are also several disadvantages that companies should consider:   

• Complex transactions with time-consuming and disruptive processes
• Poor execution of post-merger integration, leading to employee resistance, loss of key talent, and decreased productivity
• Conflicts and challenges in aligning different management styles, decision-making processes, and strategic priorities, hindering the realization of intended goals
• Substantial financial risks, including transaction costs, legal fees, and valuation expenses  

What data is needed for an M&A transaction?  

M&A managers need reliable and up-to-date market information, including: 

• Company information
• Industry information
• Competition information 

With data addressing these categories, decision makers can perform due diligence and assess the following:  

Check M&A candidates for legitimacy and business metrics 

An examination of a M&A candidate’s legitimacy and business metrics enables the target company to make sure that they are not getting involved with economic and financial crime. Without checking this information, the acquiring company could be liable for non-compliance or illegal practices indirectly.  

Analysis of business metrics enables the likely success of the merger or acquisition to be predicted. Having a good history of the business metrics of a prospective candidate will allow companies to make an informed decision about the agreement.  

Use multiple sources of data 

To create a robust basis for M&A due diligence, you need more than just one source of information. Do not rely on a single source or only on the free Internet. A professional business database provides certainty in the information procurement process and is essential for successful M&A transactions and agreement. 

The role of M&A managers 

M&A managers are responsible for preparing for a merger or acquisition, which is challenging and fraught with capital risk. 

M&A managers have the responsibility of basing transactions and investments on valid and high-quality data. They must analyze information thoroughly and portray that data comprehensibly. Decision-makers must then be able to rely totally on these analyses. 

The difference between the free web and deep web for M&A research 

If the freely available Internet is used for research, there is a risk that information will be inaccurate or that important information–which may be hidden behind paywalls–will be missed. Therefore, it is important for M&A mergers to have access to secure, validated, and complete datasets when conducting their analyses. The deep web is superior to the open web for these searches because:  

Relevance and quality sources  

The biggest different between paid-for online databases and public search engines is that the former guarantees quality -- not just quantity. In professional research tools, the sources are selected and strategically collated by experts. The deep web also includes licensed content that may be hidden behind paywalls on the free web. 

Extensive archives and filter options  

For research purposes it is particularly important to be able to consult an extensive archive of high-quality sources. A professional research tool gives you access to deal with the sources such as The New York Times, The Washington Post, The Guardian, FAZ, and Wirtschaftswoche. The comprehensive archive of these publications goes back for an average of 20 years.  

Filter options are useful for reducing research results to a small number of relevant hits. This enables you to avoid being inundated with information and leads you quickly to the information you need. 

How LexisNexis supports mergers and acquisitions 

LexisNexis offers solutions to streamline your merger and acquisition research. With Nexis^® Research Solutions, you can explore relevant data in easy-to-filter formats, so you have a more direct path to profound insights and informed conclusions. Access over 36,000 licensed sources and 45,000 total resources in over 37 different languages for complete, accurate, and verifiable data.  

All data is classified by topic, industry, location, people, company, and other tags with our proprietary LexisNexis^® SmartIndexing Technology™, making it easy to search, sort, and use. So you have all the information you need to make sound investment and business decisions to grow your organization.

 

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