Mehu Mohan, University of Petroleum and Energy Studies, Dehradun
M&A Activities
Often people use ‘mergers’ and ‘acquisitions’ interchangeably, but these two words have different meanings. Mergers and Acquisitions are becoming very popular in India. Mergers and Acquisitions are a big part of the corporate finance world. A famous equation of one plus is equals to three is followed which is also the special alchemy of a merger or an acquisition.
In simple words an acquisition takes place when a firm takes over another firm and establishes its control as a new owner. ‘Mergers’ is when two firms of the same size come together and join forces to move forward rather than being owned separately. Firms often attract to Mergers and Acquisition activities when times are tough, a strong company would look to buy other companies which are a competition to them or are cost efficient companies. And in turn both the firms would come together to gain a larger market share or would aim to achieve efficiency. Target company would often agree to be purchased seeing the benefits or simply when they are not able to survive alone.
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