What is the merger and acquisition of companies?
Due to the constant need of companies to generate more income and reduce expenses, streamline processes, innovate or improve services to offer a better experience to customers, apply new technologies and continue competing in the field to which they belong, has led the owners of companies to experiment with different transactions such as: merger and/or acquisition.
The acquisition of companies, also known as participation, is the process by which a company contracts a part of the share capital of another with the aim of controlling it partially or totally, according to the percentage of capital acquired and according to the distribution of the rest of the shares of the company.
Although this process can be carried out through a purchase and sale contract, other methods have been applied to carry it out, the two most common being: financial leverage and public offer for the acquisition of shares.
What are the benefits of the Fusion service and
Clients are offered the certainty to launch expansion plans, taking care of the risks of integrating new lines of business, technology, brands or assets into their operating force. Within the scope of this service is providing a valuation of the company by adjusting the fair value of the assets - debt, negotiation between parties, Due Diligence and the conclusion with the closure therefore, in accordance with the National or International Standards make adjustment for Consolidation of Financial Statements.
Why do I need the Merger and Acquisition of Companies service?
There may be various reasons for deciding to carry out a merger and acquisition of companies, the main reasons are:
|Decrease in Operating Expenses|
By sharing a physical space, expenses such as rents, some service payments and, in general, those fixed expenses derived from the operation of the companies can be reduced.
|Greater Geographic Reach|
By buying a company that has a geographical presence in places where the acquiring company does not yet have a presence, it can allow you to reach a market more quickly without having to incur lengthy processes and in some cases more expensive when wanting to do it on your own.
|Decrease of Competition|
Sometimes you decide to buy a competing company, because in this way you can cover a larger part of the market and reduce the expenses that would have to be incurred to improve the innovation or processes of the company you want to compete against.
|Product and Market Diversification|
By buying or merging companies that do not necessarily share the same products or markets, they allow a larger market to be reached in a shorter period of time and also allow the dependence on a single market or service to be reduced.
What is Business Integration?
The purchase or merger of one company with another, as long as said companies are competing in the same sector, the objective of seeking this type of integration consists of the search for economies of scale that allow reducing the average unit cost, also, The aim is to obtain greater “market power”, market participation and in this way capture the majority of consumers in that industry. This type of integration also allows adapting the technologies and processes developed by competitors to obtain greater growth. and innovation in a shorter period of time.
It is the company's acquisition of a supplier with the aim of producing its own inputs (backward integration) or from one of the clients in order to have their own production (forward integration).
What are the main reasons for buying a company?
When a company is in a growth stage, it frequently requires capitalization by shareholders or reinvestment of dividends, which can be difficult for some shareholders, since having to reinvest all their capital will lose liquidity; which, can motivate to sell a proportion or the totality of the actions to have a more liquid patrimony.
There may be differences between shareholders due to the policies and measures taken within the company; which may lead to the decision to sell the shares or to replace a partner.
When companies are in a stage of growth or development, they do not always have the financial, organizational or technical means to continue the project. In these situations, the partial or total purchase of the company can be sought to obtain the necessary resources. to continue operations or for someone else to conclude the development of the project, obtaining economic benefits from the sale of the company at this point where positive flows have not yet been generated or where a break-even point has not yet been reached.
In various situations, companies being inherited from one generation to another run the risk that there is no successor who wants to take control, which can lead to the partial or total sale of the company.
Sometimes, when evaluating the performance of investments within the company, it is detected that there are opportunities in the market that can offer greater benefits. In order to obtain the necessary capital to invest in these markets with greater profitability, it is decided to sell the participation that is held within the company to take other investment alternatives.
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