In the modern economic literature, there is a significant amount of both theoretical and applied works devoted to various aspects of the difference between acquisition and merger.
The Merger and Acquisition Tactics
At a certain stage of the company’s activity as a market player, in order to strengthen its competitive position, it is necessary to move to a qualitatively new level of technology, financial resources, and labor relations, business development opportunities, etc. tough opposition of transnational corporations. At the same time, cross-border mergers and acquisitions affect not only the internal markets of states but also the world as a whole.
It is not surprising that the technology sector has come out on top in terms of growth in the number of transactions: today the minds of companies around the world are seized by the idea of digital transformation, which is fundamentally changing the way and how they do business, as well as the daily life of people. The trend towards digitalization has become widespread in almost all countries of the world. The companies, both large and small, were actively involved in the development of digital solutions in various areas – from mobile applications to artificial intelligence and products based on blockchain technology.
International researchers and experts in mergers and acquisitions believe that there are five periods of high activity in the field of mergers in economic history, often referred to as “waves of mergers”. These periods were cyclical. A period with more mergers was followed by a recession with relatively fewer mergers. Taking into account that each period of high activity in the field of mergers has its own characteristics and a noticeable impact on the global economy, that can be considered in more detail.
The M&A tactic leads to a noticeable simplification of the portfolio of creditors, the concentration of collateral in one hand, and, in theory, to an increase in the percentage of return of one of the lenders by rescuing the borrower and by partially writing off the debt of other creditors. Such transactions between creditors of the same borrower occur much more often than transactions for the sale of debt to specialized funds, since access to information of participants in such transactions is equal, in contrast to the purchase of debt by a buyer who knows little about the real state of affairs of the borrower, the positions of different lenders and the forecast of future cash flows.
Data Room Acquisition and Merger Difference
In recent decades, the world economy has undergone significant changes and today shows an expressive trend towards globalization. First of all, this direction is characterized by the unification of the financial sector, the integration of financial markets, which finds expression in the internationalization and expansion of the business sphere, as well as the entry of companies from different countries to new markets. International experience shows that under the influence of modern development trends, there is a removal of any barriers that artificially separate different types of companies’ activities and places of their operation from each other.
The main difference between data room acquisition and merger include:
- a wide range of unique opportunities for optimizing a business;
- increasing opportunities, establishing leadership in a segment;
- entering new sales markets, obtaining unique technologies, and developing additional activities of economic entities.