We have all heard of companies merging or companies acquired by another company, but probably do not know anything about what these mean in general terms.
When you break it down, the process itself is not all that complicated to understand, although the actual mergers and acquisitions in Salt Lake City, tannerco.com explains, may take years to finally end.
Here are the basics of M&As.
Experts like to define M&As as “one plus one makes three.” The main idea is merging two companies into one gives more value to people who have a stake in it. This includes investors, company owners, and employees. The same holds true when a big company buys or acquires a smaller company, such as a startup. It all boils down to strategy; two companies together make beautiful music together. At least, that is the idea. It does not always happen, of course.
While M&As are usually lumped together as one, they are quite different when it comes to who is the boss. In a merger, the two companies, typically of the same size, agree on a sort of joint venture, where the company owners decide on who controls what and how. In an acquisition, the one buying the company, usually the one with more money, takes over the smaller company completely. Some call it a “hostile” takeover, but that is all a matter of management. Some employees may feel they have been “invaded” but personal feelings seldom have anything to do with it. It is a business strategy, nothing more.
In an ideal world, M&As can help improve the way the two companies work. They can become more efficient, get more bargaining power, and attain better visibility. This translates to higher profits for company owners and investors, and in some cases, employees with stock options. It can also mean better working conditions and career advancement. However, it may also mean layoffs, and a shift in management style that may not always sit well with entrenched employees.
M&As have a bad reputation, but it can benefit many companies, especially startups are ready for expansion. As with most changes, how well it works depends on the people who are driving it.