There are many companies which have been established to produce goods and services that are in high demand. The market has been very competitive because most products have close substitutes and have different features which buyers look at. This is why some firms have opted to join hands to produce similar products. The M&A have been effective in promoting competition and increase in the quality of goods produced.
It has been found that mergers and acquisition often lead to increased value generation. When the parent companies are merged together, the number of shareholders increase which increase the available capital by a great margin. The firms are therefore provided with enough capital to venture into new business that will bring about more returns and growth.
This method is also important for marketing strategies. In an event one firm is undergoing difficulties in marketing its products in a new market; it can use the reputation of a known company. This will aid in promoting the sales where buyers buy more. This in return brings more revenues to both companies that are involved in the production of goods.
The economies of scale enjoyed by the joint firms are very low. When companies come together to produce or offer a service, the cost involved in generating it is reduced per unit of output. The technology applied is same to all products hence the production is done on great levels. More production brings about more sales and revenues while the cost is minimized.
Mergers and acquisition are recommendable because the firms will enjoy tax gains. The tax applicable to a firm is usually set on the total earning earned during a given year. The amount has been found to be slightly lower as compared to the one charged on two or more separate firms which operate independently. The dividends payable to shareholders are taxed at a lower amount hence they enjoy better returns.
Firms which agree to join together in the production process benefit from advanced technology. In an event where one company was using a more advanced system, the entire technology is adopted in production. This promotes efficiency with the use of raw materials hence high returns are enjoyed.
Mergers and acquisitions enjoy the ability to fix their own selling prices. The management is able to calculate the costs involved in producing a given amount of output. The revenue raised is as well estimated. This helps in fixing the selling prices which buyers will be willing to pay. The agreement helps in keeping the loyal customers.
Other beneficiaries of Merges and Acquisitions are employees who enjoy better remuneration. Most companies tend to retain most of their employees even after forming a joint venture. The high profits earned translate to a better pay to all workers. Some also get promotions where they are taken to managerial staff. This improves their morale to perform better.
It has been found that mergers and acquisition often lead to increased value generation. When the parent companies are merged together, the number of shareholders increase which increase the available capital by a great margin. The firms are therefore provided with enough capital to venture into new business that will bring about more returns and growth.
This method is also important for marketing strategies. In an event one firm is undergoing difficulties in marketing its products in a new market; it can use the reputation of a known company. This will aid in promoting the sales where buyers buy more. This in return brings more revenues to both companies that are involved in the production of goods.
The economies of scale enjoyed by the joint firms are very low. When companies come together to produce or offer a service, the cost involved in generating it is reduced per unit of output. The technology applied is same to all products hence the production is done on great levels. More production brings about more sales and revenues while the cost is minimized.
Mergers and acquisition are recommendable because the firms will enjoy tax gains. The tax applicable to a firm is usually set on the total earning earned during a given year. The amount has been found to be slightly lower as compared to the one charged on two or more separate firms which operate independently. The dividends payable to shareholders are taxed at a lower amount hence they enjoy better returns.
Firms which agree to join together in the production process benefit from advanced technology. In an event where one company was using a more advanced system, the entire technology is adopted in production. This promotes efficiency with the use of raw materials hence high returns are enjoyed.
Mergers and acquisitions enjoy the ability to fix their own selling prices. The management is able to calculate the costs involved in producing a given amount of output. The revenue raised is as well estimated. This helps in fixing the selling prices which buyers will be willing to pay. The agreement helps in keeping the loyal customers.
Other beneficiaries of Merges and Acquisitions are employees who enjoy better remuneration. Most companies tend to retain most of their employees even after forming a joint venture. The high profits earned translate to a better pay to all workers. Some also get promotions where they are taken to managerial staff. This improves their morale to perform better.
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