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What to expect from corporate mergers

On Behalf of | Oct 4, 2022 | Corporate Litigation

New York businesses combining resources and restructuring into one company is the definition of a merger. Acquisitions take over one company from another, while mergers join two or more existing businesses. However, one company may have a higher stake and responsibility, while most unification results from the owners’ collaboration.

Mergers happen when businesses agree that they will perform better if they combine efforts. The agreement might include a stock exchange as part of the deal, which likely increases the value per share. Shareholders can vote to decide if a merger offers investment potential.

Factors in mergers

The goal of a merger is to combine two or more companies into a stronger and more profitable one. Each company contributes resources for increased profitability. The following list includes the benefits of a merger:

• Strengthen position relative to industry competition

• Streamline production costs

• Cost-sharing

• Shared values

• Increased stock value

Companies merge to improve their bottom line and increase profitability for their investors. Companies may retain their brand names or create a new brand under the agreement. Businesses seek to maintain their customer base; therefore, the specifics are handled behind the scenes to preserve shareholders’ confidence.

What to expect in a merger

Combining manufacturing and human resources reduces expenses and improve efficiency. Joint efforts in sales, marketing and technology increase visibility and helps the company perform well in new markets. Expansion attracts new business resulting in higher revenues.

Profitability is higher if one company buys the other company’s common stock. For example, Company A buys the common stock of Company B to create Company C. In this scenario; shareholders might receive a dividend from a boost in the profit margin. Mergers are standard business practice, and companies do their best to make decisions that increase profits and generate revenue.