Economics – Growth and survival of firms | e-Consult

Advantages of M&A:

• Increased Market Share: Combining with a competitor can significantly increase a firm's market share, leading to greater pricing power and economies of scale.
• Access to New Markets: M&A can provide access to new geographic markets or customer segments.
• Synergies: Combining operations can lead to cost savings through economies of scale, reduced duplication, and improved efficiency.
• Access to New Technology or Expertise: Acquiring a firm with valuable technology or expertise can accelerate innovation and product development.
• Reduced Competition: M&A can eliminate a competitor, leading to a more dominant market position.

Disadvantages of M&A:

• Integration Difficulties: Integrating two different organizational cultures, systems, and processes can be challenging and time-consuming.
• Loss of Key Personnel: Acquisitions can lead to the departure of key employees from the acquired firm.
• High Costs: M&A transactions can be expensive, involving significant legal, financial, and advisory fees.
• Regulatory Scrutiny: Large M&A deals are often subject to regulatory scrutiny to ensure they do not create monopolies or harm competition.
• Risk of Failure: M&A deals can fail if they are poorly planned or if the integration is unsuccessful.