Corporate operations: mergers and acquisitions, sale and acquisition of companies and/or assets, venture capital
Company Mergers and Acquisitions (M&A) are the part of a company’s corporate strategy that involve the merger and acquisition of other companies and assets. They are investment decisions, understood to be the allocation of resources with the hope of obtaining future income that will enable the invested funds to be recovered and a certain profit to be obtained.
Their utility is determined by several things: (i) efficiency gains via productive synergies associated with the economies of scale and scope, (ii) obtainment of financial synergies, (iii) increased market power, (iv) existence of investment opportunities, (v) mergers as a response to changes in market size, together with the process of economic integration between countries, (vi) speculative reasons, (vii) changes in corporate governance structures, (viii) disciplinary function, (ix) to undertake business restructuring processes (i.e., in Europe many groups have resorted to merger and takeover operations to reorient their core businesses and achieve “tradeoffs” in various activities), (x) to undertake internal restructuring processes in order to do away with inefficiencies (disinvestment or reuse of their assets may result in increased productivity, especially in cases of bankruptcy).
Because merger processes usually have an impact on employment and working conditions (in terms of dismissals and staff reorganization), they should receive a special treatment (see LABOR FORCE ADJUSTMENT PLANS product).