Mergers can be defined as the process of consolidation or absorption of two companies to yield more profit. When two companies experience a decline in their performance, they join hands together. It takes place through the exchange of shares and assets. Acquisitions are the process of purchasing a company. When a company faces fall in its shares or lose its value, it will sell its properties to another company. It takes place by the purchase of assets and stock shares.
There are several M&A firms in our country. They provide enough ideas and advises us in the process of mergers and acquisitions in India. They put forth a strategy for both companies.
In simple terms, mergers are the combination of two companies and acquisitions is the purchase of one company by others. In general, they are the transaction of ownership. M&A takes place to improve the performance of the companies. It accelerates the growth and increases market share and positioning. The synergy value for these companies will be high. End of the day, the companies will share either higher revenues or lower expenses.
Though the process seems to be a profitable one, it is not a bed of roses. It has its ups and downs.
- Overestimation and poor strategy may affect progress.
- As a result, the management will be too positive to fail in decision making.
- If integration management fails, it will cause the failure of implementation.
- Improper due payments can cause loss, even after the process of mergers and acquisitions. Due diligence is the base of business management.
- Apart from management issues, the companies and the members of the staff need structural and cultural adjustments.
- Sometimes acquisition destroys teamwork. Employees will feel detached from the company.
- The employers may cherish the rapid growth but not the employees. They are ones who have to work hard. Extra work hours and other work pressure may cause a decline in their performance.
- It may lead to the dishonesty of employees.
As said, one of the best methods to expand a business is this external expansion. M&A firms will step in and sort out the issues in the process. They guide their clients and provide strategies to keep the companies from loss. We have different kind of M&A firms in our country. Their field of action and approach differs from one another.
Any M&A process needs a strategy that should look at the essential roles of the process. Any two companies that join hands must understand each other. They should understand the socio-cultural background, strength, weakness, and business. M&A firms play a vital role in the process.
Some famous M&A firms in India are,
- AZB & Partners
- Shradul Amarchand Mangaldas & Co.
- AKM Global
- S&R Associates
- Vaish Associates
- Bharucha & Partners
- Khaitan & Co.
- Cyril Amarchand Mangaldas
- J Sagar Associates
- Desai & Diwanji
As the rate of success of the process is 50%, it will be better if the companies look forward to the help of M&A firms.