Want to Learn about Mergers and Acquisitions? Here’s Your Guide

In today’s scenario, various factors contribute to the success of a business. Gone are the days when a businessman catered to the needs of customers, built rapport with them and that would create sales. The viability of the business now depends on business strategies that are implemented. Competition has risen in the business sphere therefore, putting your soul and heart into the business would not yield results. You have to go the extra mile while prepping business strategies. Apart from this, expanding the business or entering into diverse fields is also important. Conversely, mergers and acquisitions are a part of business expansion. 

What are Mergers and Acquisitions?

Mergers and acquisitions are defined as a wide concept. Both terms are interrelated but have different meanings. The acquisition means when a firm takes hold of another firm and becomes the new owner. Such a purchase is counted as an acquisition. On the flip side, when two companies join themselves, form into a single entity and work as well as operate together from then onwards; such a transaction is considered as a merger. 

Different types of mergers and acquisitions are being practiced in India, which are as follows: 

Horizontal Merger

This merger takes place between two organizations that participate in the same niche. Both firms merge their operations and together enhance their performance, capital as well as profits. This process reduces competition in the industry and gives an edge over other competitors.

One of the relatable mergers and acquisitions examples is Byju’s acquiring the renowned medical coaching centre, Aakash Institute. Byju’s, which is one of the highest valued edtech firms in India, purchased a leading coaching center for $950 million in April this year. 

Vertical Merger

This type of merger occurs between two or more firms in the same segment but working in diverse sub-industries. Herein, organizations determine to amalgamate all operations and manufacturing processes under one roof. The merged companies will comprise all requirements as well as products of the industry.

Universal Nutriscience Pvt Ltd has bought Sanofi India's nutraceuticals business for $78.9 million. The company has a strategic association between Kedaara Capital and nutraceuticals firm, Universal Medicare. 

Co-Generic Merger

In this merger, two or more organizations are related in one way or other in the manufacturing process, market, or fundamental technologies. Thus, it comprises extending a range of products or purchasing components that are required in day-to-day operations. Such a merger offers great opportunities to the companies, therefore, diversifying across resources and other strategic necessities.

Tinychef, which is co-established by Sanjeev Kapoor, is lately acquiring Zelish. The company will gain access to the app's user base. It is one of the recent merger and acquisition deals that is underway.

Conglomerate Merger 

In this merger, two or more firms that work in different industries amalgamate their operations. All the companies in this type of merger are not related to each other in any form and also, their operations partly coincide. Thus, various businesses coming from different fields unify under one particular firm. 

Microsoft has lately acquired an AI-enabled tech firm, Nuance for $19.7 billion. The AI-based company renders speech recognition and conversational AI solutions to users. In addition, it supports Apple’s Siri.

If you are a businessman or aspiring entrepreneur, you should comprehend mergers and acquisitions wholly as they have become an integral part of the business market.