Photo Credit: Chief Executive<\/figcaption><\/figure>\n\n\n\nAdvantages of a Merger<\/h3>\n\n\n\n
Here, are some of the advantages of business and company mergers.<\/p>\n\n\n\n
1. Increases Market Share<\/h4>\n\n\n\n
When companies merge, the new company reaches a larger market share and leads in the competition.<\/p>\n\n\n\n
2. Reduction in Cost of Operations<\/h4>\n\n\n\n
Companies can gain economies of scale, such as bulk buying of raw materials, hence resulting in cost reductions when they merge. However, the investments in assets are now spread out over a larger output, which leads to technical economies.<\/p>\n\n\n\n
3. Expands business into new geographic areas<\/h4>\n\n\n\n
A company seeking to extend its business in a particular geographical area may merge with another similar company operating in the same area to get the business started.<\/p>\n\n\n\n
4. Avoids Duplication<\/h4>\n\n\n\n
Some companies manufacturing similar products may merge to avoid duplication and eliminate competition. It also results in reduced prices for the customers.<\/p>\n\n\n\n
5. Prevents closure of an unprofitable business<\/h4>\n\n\n\n
Business mergers can save a company from going bankrupt and also save many jobs.<\/p>\n\n\n\n
Disadvantages of a Mergers<\/h3>\n\n\n\n
Here are some of the pitfalls of business and company mergers.<\/p>\n\n\n\n
1. Creates gaps in communication<\/h4>\n\n\n\n
The companies that have accepted to merge may have diverse organizational cultures. It may result in a gap in communication and affect the overall employee’s performance. <\/p>\n\n\n\n
2. Creates unemployment<\/h4>\n\n\n\n
In an aggressive merger, a company may decide to drop the underperforming assets of the weaker company. It may result in employees losing their jobs.<\/p>\n\n\n\n
3. Raises prices of products or services<\/h4>\n\n\n\n
A merger results in low competition and a larger market share. Therefore, the new company can gain a monopoly and increase the prices of its products or services.<\/p>\n\n\n\n
Conclusion<\/span><\/h3>\n\n\n\nIn summary, a merger is the voluntary coming together of two companies on broadly equal terms into one new legal entity. Hence, the businesses that agree to merge are often equal in terms of size, customers, and scale of operations.<\/p>\n\n\n\n
Mergers FAQ<\/h2>\n\n\n\t\t\n\t\t\t\tWhat is merger with an example?<\/h2>\t\t\t\t\n\t\t\t\t\t\t
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Here are some perfect examples of mergers and also are still functioning to date. <\/p>\n\n\n\n
- Walt Disney Co. and Pixar<\/strong> Mergers<\/li>
- Sirius and XM Radio<\/strong> Mergers<\/li>
- Google and Android<\/strong><\/li><\/ul>\n\n\t\t\t<\/div>\n\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\n\t\t\t\t
What is a merger in business?<\/h2>\t\t\t\t\n\t\t\t\t\t\t
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A merger is an agreement that joins two existing companies into one new company. However, there are various types of mergers and also several reasons why businesses merge.<\/p>\n\n\t\t\t<\/div>\n\t\t<\/div>\n\t\t<\/section>\n\t\t\n