The Future of Online Merger and Acquisition Transactions

M&A is a key factor in the corporate world. Online M&A transactions have become more frequent. In the event of a merger two companies will either merge to create a single entity (merger), or they may purchase the other company from its shareholders and take the operations of the other company (acquisition). Both types of M&As are accompanied by significant financial implications. Companies participate in M&A to capitalize on synergies and economies of scale, which allow them to save money on resources that are not needed such as regional and branch manufacturing facilities, offices research projects, and the like. The savings from such cost reductions are passed directly to the bottom line and are referred to as an accretive acquisition.

Other reasons for M&A are competitive and strategic, such as gaining access to a new technology or capability or expanding into new markets. The direct-to-consumer mattress seller Purple, for example was recently purchased by Cisco for $1.1 billion. These deals are typically more attractive for investors than an equity deal, which entails the investor buying shares in the acquiring company and owning them long-term.

M&A may be affected in the near-term by try this site the coronavirus outbreak that is currently in progress. Buyers will need to evaluate the advantages and potential risks of a transaction against the risks and costs and their internal rationales must be more convincing. Third-party consents will be harder to obtain, including from customers or intellectual property licensing companies. M&A valuations will be more difficult to determine given the coronavirus outbreak, and the well-known adage of “getting everyone in the same room” to negotiate is unlikely to be feasible at the moment.