www.dataroomdev.blog/ma-market-state-2022-and-prognozes/
The market for mergers and acquisitions (M&A) is a major part of many public companies growth strategies. Large public companies with excess cash are often looking for opportunities to acquire for inorganic growth. M&A is typically a merger of two companies that are in the same sector, at similar levels in the supply chain.
In general, a company may buy another company for stock, cash or the assumption of debt. Sometimes, the investment bank involved in the sale of one company will also finance the company that is buying it (known as the staple financing).
M&A typically begins with a thorough evaluation of the target company, including financial reports including management and business plans, and other relevant information. This process is referred to as valuation and can be carried out by the acquiring company or outside consultants. Typically, the business performing valuation should consider more than just financial data, for instance, cultural fit and other factors that will impact success of the deal.
The most frequent reason to do a merger or acquisition is to grow. By increasing the size of an organization gives it economies of scale that reduce operational costs as well as increases bargaining power with suppliers of raw materials, technology or services. Diversification is another factor to improve a company’s capability to weather downturns in the economy or to provide more stability in income. Certain companies buy out competitors to improve their position in the marketplace and take away any future threats. This is known as defensive M&A.