Merger and acquisition (M&A) is the consolidation of two companies for reasons such as diversification, acquiring talent, spurring business growth, and so on. Mergers happen when two companies join to become one, with one company absorbing the other and the other ceasing to exist. Acquisitions, on the other hand, are when one company buys most, if not all, of the other company’s shares – but the company that has been bought (or acquired) continues to use the same name and legal structure as before. Whilst most M&As that are featured on the news happen with big companies, the truth is that the majority occurs between small to medium-sized companies in Singapore.
There are many advantages of performing mergers or acquisitions. Hence, small and medium companies often engage in M&A advisory services in Singapore to discover whether it is a feasible option for them and identify the best M&A growth opportunities for the business. In this blog, we share the main motives for companies to do M&A so that you can evaluate your strategies for long-term business development.
#1 Create growth opportunities
M&As increase the market share of companies, thus allowing them to operate on a larger scale and generate greater profits. It also increases the customer base and boosts brand recognition and loyalty; when many other people are using the product or services from a particular company, it is more likely for more people to desire offerings from the same brand. Oftentimes, companies choose to merge with or acquire a competing company to gain a competitive advantage and dominance in the industry. Hence, with M&As, companies open their doors to greater growth opportunities.
As M&A allows companies to easily penetrate different markets or offer new products and services, it is common to use M&A to diversify business operations. For instance, a snacks brand might merge with an organic nutrition bar company in order to enter the natural food market whilst offering a wider variety of snacks to their customers. Although M&A also allows companies to diversify their risks, it may not always be the best option. Thus, it’s always best that you engage M&A advisory services in Singapore to locate the ideal solution for your business needs.
#3 Acquire talent and assets
A company could be interested in doing M&A to acquire assets that are difficult to obtain; instead of increasing their market share, the main objective is to procure the other business’s operating assets, which can be tangible or intangible. Tangible assets include technologies, inventory, or equipment, whereas intangible assets are things like client lists, trademarks, or copyright. Talent acquisition can also come through M&A, where the company purchases another to quickly acquire the talent they need for their business operations.
Whether you’re looking to purchase or sell a company through M&A, sourcing for the right businesses, analysing the potential financial impacts and benefits, as well as developing a negotiation strategy will help you to maximise your company’s value and make successful long-standing deals. All in all, it makes business sense to use trusted M&A advisory services in Singapore like ours to take your business to new heights.
About CLA Global TS (formerly Nexia TS)
Founded in 1993, CLA Global TS (formerly known as Nexia T.S.), is an award-winning Asia-Centred Business Advisor. An independent member firm of CLA Global Network, CLA Global TS provides a full spectrum of professional services including, but not limited to Assurance & IPO Reporting, Tax, Risk Advisory, Valuation, Insolvency & Restructuring, Sustainability & Climate Change Advisory and more.
For more information, visit CLA-TS.com.