Question

PROMPT:   The  article refers to the ‘theory of competitive harm’ in which a company (like Facebook) can be charged with anticompetitive practices for buying startups ‘that might ultimately unseat them.’

Assuming that the investors in the startup were not coerced into accepting the terms of the buyout transaction and that all elements of proper corporate governance were observed, is there actually a problem with having a large company acquire a much smaller company whose business concept is attractive to the large company?

Answer 1

in this globalized world, not only the weaker company but also the well-functioned companies aim mergers and acquisitions for their product expansion, product diversification, cost-efficiency, and various other factors. a large company acquiring a small company have lots of benefit for both the acquirer and acquiree. a large company from a different part of the world acquiring the small company in different parts of the world, which is well functioning helps both the company in their product extension and diversification. through this, the small company grows to the level of that of the bigger company and that gains customer satisfaction and trust whereas the big company can influence the regional functioning and also take advantage of its dominance or hegemony. this also in a way creates inorganic growth.

even though it possesses certain systematic, operational, and financial risk which cannot be left unseen. Hence in consideration of all these risks if the larger company is ready to accept a much smaller company whose business concept is attractive to the large company then it shall benifit from it.