All Merger and Acquisition operations are carried out in the purpose of creating synergies, that must be identified and distributed among the participants of the operation.
From an economic point of view, synergy is created when, implementing a series of changes, the economic value of the company and the shareholders are increased.
The synergies that justify a Merger and Acquisition operation can be grouped into two main types: synergies from operational improvements and synergies from improvements in financial aspects.
Operating synergies would produce a sustainable increase in Free Cash Flows over time (FCL) of the company, this is, an increase in the company's capability to produce free cash flows and therefore an improvement in its liquidity.
While financial synergies would sustainably reduce the cost of stock, helping to increase the value of the company and profitability for shareholders.
One of the most frequently sought operational synergies in Merger and Acquisition operations is scale economy and horizontal integration.
The phenomenon of scale economies usually refers to the dilution that occurs in fixed expenses as a result of the merger of two companies operating in the same sector. (Horizontal integration). The goal, likewise, concentrates on getting that, as a company increases its production, your costs are reduced. Besides, in horizontal integration processes, significant savings can be obtained by eliminating common expenses.
AVOID MAKING WRONG DECISIONS!
LEAN ON ATICA BUSINESS BROKERS AND YOU WILL AVOID MISTAKES LIKE:
- An insufficient previous study of the candidates.
- Lack of realism in the synergies considered.
- Conflict of cultures in integration.
- Slow operation.
- A faulty negotiation of synergies.
We cover both the buyer and seller for proper identification and correct quantification Synergies;
It is a key job to be able to negotiate a reasonable economic value that can lead to a final price agreement..
In practice, the main reasons for mergers and acquisitions are:
- Access to new markets.
- Maximize shareholder value.
- Increase or protect marketplace share.
- Acquire new products or services.
- Gain control over a distribution chain.
THAT KIND OF PROCESSES ARE NOT JUST AN OCCASION TO JOIN OR PUT DIFFERENT THINGS TOGETHER, IS AN OPPORTUNITY TO BUILD SOMETHING NEW!