Blog

M&A plays a major role in corporate life. Online M&A transactions are becoming more common. During a merger two companies will join to create one entity (merger), or they may purchase the other company from its shareholders and take over its operations (acquisition). Both kinds of M&As are accompanied by significant financial implications. M&As are often undertaken by businesses to reap the benefits of synergies and economies-of-scale, which helps them save money in redundant resources, such as manufacturing plants branches and regional offices, research projects, and the list goes on. The savings from such cost reductions are passed directly to the bottom line and are known as an accretive transaction.

Other reasons for M&A are strategic and competitive for example, such as access to a new technology or capability, or expanding try this site into new markets. The direct-to-consumer mattress company Purple, for example was recently acquired Cisco for $1.1 billion. These types of deals are usually more attractive for investors than an equity deal, which involves the investor buying shares in the company being acquired and then owning them for a long time.

M&A may be impacted in the short-term by the coronavirus outbreak that is currently in progress. Buyers will need to weigh the benefits and risk of a deal against costs and risks and their internal reasons will need to be stronger. It will also take longer to get third-party approvals, including from customers and intellectual property licensing organizations. M&A valuations will be harder to determine due to the coronavirus outbreak, and the well-known adage of “getting everyone in the same room” for a negotiation is likely not feasible right now.