Heinz and Kraft, Zimmer and Biomet, Medtronic and Covidien all have been proving that mergers and acquisitions might be the latest trend. Regardless of their industry niches’ many companies are merging and becoming a comprehensive entity.
The idea of combining two strong teams restores the notion of serving a wider range of customers. By blending the talents, capabilities, and technologies of two companies they maximize their production and value.
At Metal Craft & Riverside, we believe there are vital key reasons why mergers are becoming more relevant today than in the past.
1. Focusing On Strengths
As two companies become one, there is a heavy focus on what strengths and weaknesses need revision. When mergers are in the negotiation stage, many aspects are analyzed, however, one common thread is both companies are honest about one another’s strengths. They then hone in on them. Instead of worrying about fixing weaknesses, they recognize the strengths of how businesses ran individually and maximize on those areas.
2. Larger Market Share and Cross Promoting
By combining companies, customers begin to merge as well. When both companies have a strong customer relationship, the merger will not affect their loyalty. In fact, most mergers see an increase in opportunity to serve their customers with increased capabilities due to the shared technologies and information. They gain way more accessibility to cross promote and use that leverage to combine audiences.
3. Cut Cost
When two companies have similar services or products, costs are reduced. By streamlining functionalities and (sometimes) combining locations, they can create a large reduction in cost. Couple this with their gained consumers, the profitability can increase.
4. Increased Capabilities
Many mergers benefit when the companies gain each other’s equipment, technologies, and expertise. Whether one side has the equipment, and the other has better knowledge, many mergers thrive when they consolidate because they gain one another’s capabilities. Research & development is one common department that greatly benefits from a merger. These gained capabilities directly relate back to honing in on one another’s strengths that when combined add great value to the overall new company.
In some industries, it makes sense to have a merger for overall survival. Often times the two separate companies compete with one another to maximize on the industry they both work in, it may be beneficial to join forces.
Strengths, larger customer-base, improved capabilities, and a better overall survival rate are all reasons why mergers have been so prevalent in recent news. These are all great assets for both parties. Consequently, mergers are a constructive way for two companies to be a collective firm and stay significant for the future. MetalCraft & Riverside don’t think that we will see a shortage of mergers anytime soon. Are there any other reasons you think mergers are becoming more prevalent than ever? Connect with us on twitter to add your comments on what benefits two companies becoming one in an acquisition!