Before we get into M&A platforms it would be useful to first understand what the acronym M&A stands for and what it is all about. M&A stands for mergers and acquisitions.
The terms mergers and acquisitions refer to two or more companies coming together or the consolidation of their major assets through financial transactions between them.
Both terms, merger and acquisition are often used interchangeably however both differ in meaning. An acquisition happens when one company buys another company outright. The bought company becomes part of the already existing company.
A merger on the other hand is the combination of two companies. Through a merger, both companies come together to form one new legal entity under the banner of a new corporate name.
Why would companies Merge?
Two companies could merge together for a whole host of reasons. For the most part, mergers and acquisitions happen to bring about growth for both sides. For example, a major beer company could buy a small local brewery. This kind of merger would allow the small local brewery to not only produce more beer but increase its sales and brand loyalty.
A company merger is a great way to expand its market share and diversity its customer base. Competitively, companies can gain a big advantage with a smart merger. Like our example of the small brewery above, by buying out a supply chain the bigger company gains an advantage with more supply chains and increasing their product output. This also lessens the competition for both companies involved in the merger.
Types of Mergers and Acquisitions
There are a few ways companies could merge together. Let us take a look at some of the most common types of company mergers and acquisitions.
- Horizontal Merger – A horizontal Merger is when two companies in the same market share come together to dominate the market share.
- Vertical Merger – A vertical merger happens when two companies come together who are in the same industry who operate in different stages of production. For example a retailer merging with a wholesaler or a wholesaler merging with a manufacturer.
- Congeneric Merger – This is sometimes known as a concentric merger. This type of merger involves the acquirer and the target company having different products but operating within the same market and selling to the same customer.
- Market Extension and Product Extension Mergers – A market extension and product extension describes two companies in the same industry who join forces in order to expand their market reach.
- Conglomerate Merger – A conglomerate merger is very different from the other mergers on this list. This kind of merger often occurs between two companies whose business activities and industries are completely unrelated. A pure conglomerate merger is when two firms continue to operate separately in their own markets. Whereas a mixed conglomerate merger is when the firms look to expand market reach.
What is an M&A platform?
For large global businesses mergers and acquisitions can be a significant source of expansion and transformation. Despite this the process of merging or acquiring another company can be long and difficult. Experts believe 70% of negotiations fail to achieve their original objectives. The M&A process isn’t always well-structured and straightforward. Oftentimes M&A deals are secretive and not always transparent.
An M&A platform is probably best explained with an example. An example of a good M&A platform is SME Market. The site is owned by M&A professionals with the mission of giving those looking to buy and sell business a simple, quick and secure process. The site has lots of businesses for sale all across the U.K. The businesses for sale range from construction businesses to retail companies.
The website design by Webpop Design, is phenomenally easy to use. This is an element that is essential to a good M&A platform. It must be easy to use and create a frictionless service between buyer and seller. A difficult to use M&A platform only creates an extra problem in the already complex deals that are mergers and acquisitions.
There are many elements that make up a good M&A platform. They must include features that support the process of a merger and acquisition deals. Provide a virtual data room, have due diligence features and of course provide post-merger integration tools. In short an M&A platform should make life a lot easier on the company being sold and the company buying or merging with that company.
In this modern era of business, many business deals are carried out online. Mergers and acquisitions are no exception. A modern day M&A platform uses digital methods to speed up the process of M&A deals. This quicker process is also much more open with information being streamlined. M&A platforms simplify the deal management system greatly. All departments that are involved in the deal can collaborate and share information in real time. All the relevant information is accessible at any time from almost any place or device. This transparent business practice fills buyers and sellers with a greater sense of safety and trust by using an M&A platform for their deals. A good M&A platform makes the act of merging and acquiring businesses a much easier and safer task for everyone involved.