The Impact Of M&A To Firms
| 04:17:00 |
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.
There are benefits which managers expect by forming mergers with other entities. The main reason is that the capital owned by the joint company is increased. All shareholders from the parent companies are brought together and contribute the capital at new interest rates. If the rates are very attractive, more capital is raised for investing into new ventures with better rewards.
A firm may use the acquisition decision to help sell more of its products to a market dominated by another company. This is where the known form is used to sell the products on behalf of the inferior firm. Buyers will buy more products hence the two entities will enjoy greater profits in the end. The cost of marketing is reduced in this case.
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.
Mergers and acquisition are recommendable because the firms will enjoy tax gains. The tax applicable to a firm is usually set on the total earning earned during a given year. The amount has been found to be slightly lower as compared to the one charged on two or more separate firms which operate independently. The dividends payable to shareholders are taxed at a lower amount hence they enjoy better returns.
Merging is very effective in sharing of skills and technology which is very efficient. Companies have different technologies which are employed in the production process. Managers can therefore agree on one method which is effective in cutting down the expenses involved and maximize the revenues. No costs are incurred in this process since all decisions are agreed before implementing.
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.
Employees have at times become beneficiaries of merging business entities. This happens when their salaries are reviewed upward. They get to earn better salaries at the same job group level. In some cases, promotions have been done and the junior staffs are promoted to higher ranks. This affects the performance of the company positively.
There are benefits which managers expect by forming mergers with other entities. The main reason is that the capital owned by the joint company is increased. All shareholders from the parent companies are brought together and contribute the capital at new interest rates. If the rates are very attractive, more capital is raised for investing into new ventures with better rewards.
A firm may use the acquisition decision to help sell more of its products to a market dominated by another company. This is where the known form is used to sell the products on behalf of the inferior firm. Buyers will buy more products hence the two entities will enjoy greater profits in the end. The cost of marketing is reduced in this case.
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.
Mergers and acquisition are recommendable because the firms will enjoy tax gains. The tax applicable to a firm is usually set on the total earning earned during a given year. The amount has been found to be slightly lower as compared to the one charged on two or more separate firms which operate independently. The dividends payable to shareholders are taxed at a lower amount hence they enjoy better returns.
Merging is very effective in sharing of skills and technology which is very efficient. Companies have different technologies which are employed in the production process. Managers can therefore agree on one method which is effective in cutting down the expenses involved and maximize the revenues. No costs are incurred in this process since all decisions are agreed before implementing.
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.
Employees have at times become beneficiaries of merging business entities. This happens when their salaries are reviewed upward. They get to earn better salaries at the same job group level. In some cases, promotions have been done and the junior staffs are promoted to higher ranks. This affects the performance of the company positively.
About the Author:
If you need the facts about M&A, go to the web pages online here today. Additional details are available at http://abuchholtz.com now.
0 komentar:
Post a Comment