Question

What are the motives for business merger and consolidations?

Answer 1

Motives of business mergers and consolidation are as follows-

A. Business mergers and consolidation are done in order to increase the advantage from the market and increase the overall competitive advantage along with market share of both the companies

B. it will also be helpful in gaining an upper hand in fixation of pricing because when two firms are merging it will mean that the entity will be becoming large and the overall customer base will be going to be larger.

C. Merger and consolidation are also done in order to gain from Synergy benefits as Synergy benefits will imply that 1 + 1 is not two but one plus one is 11.

D. It will also be helpful in larger possibility of expansion and growth along with larger probability of getting funds through The Financial institutions as the entity have become larger.

E. Increase advantage due to amalgamation of two corporate culture and it will mean that both company can share their technical know-how and secrets in order to achieve greater organisational value.

F .it would be helpful in securing a higher amount of funding from various commercial banks because commercial banks will be lending to larger entities who have a larger customer base

G. it will also help in gaining of a premium in share prices and market capitalisation against other competitors.

These are the motives for business mergers and consolidations.