There are many companies which have been established to produce goods and services that are in high demand. The market has been very competitive because most products have close substitutes and have different features which buyers look at. This is why some firms have opted to join hands to produce similar products. The M&A have been effective in promoting competition and increase in the quality of goods produced.
It has been found that mergers and acquisition often lead to increased value generation. When the parent companies are merged together, the number of shareholders increase which increase the available capital by a great margin. The firms are therefore provided with enough capital to venture into new business that will bring about more returns and growth.
This method is also important for marketing strategies. In an event one firm is undergoing difficulties in marketing its products in a new market; it can use the reputation of a known company. This will aid in promoting the sales where buyers buy more. This in return brings more revenues to both companies that are involved in the production of goods.
When two companies join up to produce a particular product, the total cost per unit is reduced. The economies of scale are lower since production is done on a large scale and the technology used is similar. This enables more production and the cost is maintained at a level where maximum profits are reaped. Firms are therefore able to enjoy better profits in the long run and short run stages.
Mangers in individual firms often feel that they pay very high taxes to the proceeds they make every year. The reason why two or more small companies may come together is to earn high revenues which attract a considerable low tax rate. More money is saved after the tax has been deducted and can be used to pay the shareholders high dividends. This encourages the firms to continue expanding their production capacity.
It is possible to use a more expensive technology to produce goods of high quality. Joints firms share their idea and skills in generating the products they deal with. The best technology can therefore be adopted to generate these products which are sold to a large market. The unit cost is reduced in the process.
Mergers and acquisitions enjoy the ability to fix their own selling prices. The management is able to calculate the costs involved in producing a given amount of output. The revenue raised is as well estimated. This helps in fixing the selling prices which buyers will be willing to pay. The agreement helps in keeping the loyal customers.
Other beneficiaries of Merges and Acquisitions are employees who enjoy better remuneration. Most companies tend to retain most of their employees even after forming a joint venture. The high profits earned translate to a better pay to all workers. Some also get promotions where they are taken to managerial staff. This improves their morale to perform better.
It has been found that mergers and acquisition often lead to increased value generation. When the parent companies are merged together, the number of shareholders increase which increase the available capital by a great margin. The firms are therefore provided with enough capital to venture into new business that will bring about more returns and growth.
This method is also important for marketing strategies. In an event one firm is undergoing difficulties in marketing its products in a new market; it can use the reputation of a known company. This will aid in promoting the sales where buyers buy more. This in return brings more revenues to both companies that are involved in the production of goods.
When two companies join up to produce a particular product, the total cost per unit is reduced. The economies of scale are lower since production is done on a large scale and the technology used is similar. This enables more production and the cost is maintained at a level where maximum profits are reaped. Firms are therefore able to enjoy better profits in the long run and short run stages.
Mangers in individual firms often feel that they pay very high taxes to the proceeds they make every year. The reason why two or more small companies may come together is to earn high revenues which attract a considerable low tax rate. More money is saved after the tax has been deducted and can be used to pay the shareholders high dividends. This encourages the firms to continue expanding their production capacity.
It is possible to use a more expensive technology to produce goods of high quality. Joints firms share their idea and skills in generating the products they deal with. The best technology can therefore be adopted to generate these products which are sold to a large market. The unit cost is reduced in the process.
Mergers and acquisitions enjoy the ability to fix their own selling prices. The management is able to calculate the costs involved in producing a given amount of output. The revenue raised is as well estimated. This helps in fixing the selling prices which buyers will be willing to pay. The agreement helps in keeping the loyal customers.
Other beneficiaries of Merges and Acquisitions are employees who enjoy better remuneration. Most companies tend to retain most of their employees even after forming a joint venture. The high profits earned translate to a better pay to all workers. Some also get promotions where they are taken to managerial staff. This improves their morale to perform better.
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