The merger and acquisition market is among the most dynamic and lucrative opportunities in the field of corporate finance. M&A is not a method that every business should adopt, but for those who can, it can provide huge growth potential. M&A transactions are generally complex and require careful planning and execution in order to be successful. The M&A begins with a thorough assessment of the business. This could involve high-level discussions between buyers and sellers to evaluate how the companies could be integrated strategically in terms of their values and what synergies could be created.

After the initial assessment is completed, the acquiring firm could make a preliminary offer to the firm it is targeting. Based on the circumstances the offer can be made via an outright purchase or a tender offer. An outright acquisition involves the acquirer buying all shares of the targeted company. This is done without the board of directors or management of the company being targeted.

A tender offer allows a publicly traded company to reach out to shareholders of a publicly-owned company and offer to purchase their shares at a cost that is agreed by both parties. This is a hostile takeover and requires the shareholders of the company’s shareholders to approve the offer before it can be completed.

The possibility of gaining the benefits of revenue and cost synergies by the combination of two companies is the primary reason behind companies looking to M&A. For example when a car company buys a company that manufactures seat belts, it can benefit from economies of scale and reduce the cost per unit as production grows. Companies also make use of M&A to gain access to technologies that is costly or time consuming to develop internally.