The Future of Online Merger and Acquisition Transactions

M&A is a significant part of corporate life, and online M&A transactions are increasing in frequency. When a merger or acquisition occurs two businesses will merge into one entity (merger) or buy the other entity from its existing shareholders and take control of its operations (acquisition). Both kinds of M&As have significant financial consequences. M&As are undertaken by companies to benefit from economies of scale and synergies, which can help them save money in unneeded resources, such manufacturing plants regional and branch offices, research projects, and many more. Savings from cost cuts are directly credited to the bottom line and are termed a transaction that is accretive.

Other motives for M&A are competitive and strategic like gaining access to an emerging technology or capability, or expanding into new markets. The mattress retailer that sells direct to consumers Purple for instance, was recently acquired by Cisco for $1.1 billion. These deals are more appealing to investors than the standard equity deal where the investor buys shares in the acquiring company and holds them for a long period of.

With the coronavirus pandemic still in the process of being cured, M&A activity may be dampened somewhat in the near future. Buyers will have to weigh the advantages and risks of a deal against the costs and risks, and their internal justifications will have to be more robust. Third-party consents are also difficult to obtain, for example from customers or intellectual property licensing companies. M&A valuations are more difficult to determine because of the coronavirus crisis, and try this site the overused adage of “getting everyone in the same room” to discuss a deal is likely to be unattainable at this point.

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