Glass Delivery Specialist

The Value of Mergers and Acquisitions

Acquisitions and mergers are typically used by companies to expand their business, whether by entering new markets, or expanding their product offerings. In the short term these deals can help increase a company’s profitability and growth. However, in the long term, these deals must generate enough synergy value to justify the purchase price to shareholders. It is vital that boards are aware and evaluate the value of M&A.

M&A volume has been growing rapidly for most of the last few years. The value of big transactions has declined and no mega deals were signed in the first quarter of this year. M&A activity is at a standstill since the middle of 2016.

This article outlines four aspects to take into consideration when assessing the worth of an M&A deal.

In the M&A industry, it’s standard that acquirers pay more than the shares of the target company to gain access to a new market. However, in many cases, the acquisition fails to provide the promised value. When this occurs the shareholders of the company that was acquired are left thinking “What were they thinking?” Examples of these failures include Apple’s purchase iTunes HP’s acquisition of the data analytics and enterprise search firm Autonomy, and News Corp’s purchase of the social media site MySpace.

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