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Mergers vs Acquisitions: Definitions, differences, opportunities and challenges

Mergers and acquisitions (M&As) offer strategies to companies for growth and market positioning. In a volatile, globalised economy, these strategies are vital for companies looking to adapt, expand and achieve long-term success.

In this article, we'll define mergers and acquisitions, explain their differences and highlight the opportunities and challenges each presents.

Definitions and differences

Mergers: A corporate merger occurs when one company merges with another company or group and loses its legal independence. The merged company takes on a new name. It may also reorganise its market position.

Acquisitions: An acquisition occurs when a company’s ownership changes hands – typically when another company or investor buys it. The buyer gains control over the acquired company and decides whether to let it operate independently or become part of the acquiring company’s structure.

Mergers and acquisitions (M&A) are different from each other. Mergers involve two or more companies coming together in mutual agreement. Acquisitions involve one company acquiring another. Similar motives may drive M&As, but the decision-making and processes are different. Both are subject to civil and competition law.

Opportunities

Mergers	Acquisitions
Strengthen competitive position by combining resources and skills. Make cost savings and expand market presence. Make inroads to new markets and diversify offerings. Reduce risk from market fluctuations. Gain access to capital markets for more growth and investment.	Rapidly gain market share. Enjoy ready access to technology and technological skills. Expand product portfolios. Use established customer base, brand values and operational structures to bolster market presence.

Challenges

Mergers	Acquisitions
Plan carefully to consolidate separate and complex corporate cultures and workflows. Comply with competition laws and need to overcome regulatory hurdles. Build trust with stakeholders, employees and customers through transparent communications.	Minimise friction through integration of existing corporate structures and culture. Ensure long-term profitability by rigorous consideration of financial aspects. Meet regulatory requirements and navigate competition law to support integration.

The significance of synergy in M&As

Synergy is a major driver of M&As. In business terms, it occurs when a single company's performance and value exceed that of its original components. Accounting for all the potential opportunities and challenges of a merger or acquisition, will the resulting company deliver on performance and value?

Marktlink – your mergers and acquisitions specialist

Each merger and acquisition is unique, presenting specific challenges and opportunities. Drawing on over 25 years of experience, we offer personal, professional and non-binding advice to help you develop the strategies to optimise your growth. To realise your ambitions, please get in touch.

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