Business Combinations Why do businesses combine; that is, what are some of the reasons for a...

Business Combinations

Why do businesses combine; that is, what are some of the reasons for a combination?

Expert Solution

Business combine becuase of the reasons stated below -

1.) Synergy :- Business combine with a idea that by combining business activities, performance will increase and costs will decrease.

2.) Growth :- Combinations can give the acquiring company an opportunity to grow market share without having to really earn it by doing the work themselves, instead, they buy a competitor's business for a price.

3.) Goals :- Buying out a company or merging with another can be a good investment when it comes to accomplishing one company’s long-term goals.

4.) Eliminate Competition :- by combination, acquirer can easily reduce the effect of competition as it will help in acquiring large market share.

5.) Increase Supply-Chain Pricing Power: By buying out one of its suppliers or one of the distributors, a business can eliminate a level of costs. If a company buys out one of its suppliers, it is able to save on the margins that the supplier was previously adding to its costs.

ekkarill92 answered 1 year ago

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