Advantages of Private Equity Merger and Acquisition Strategy

A corporate merger or acquisition is an effective strategy for company growth and additional revenue sources, which can boost bottom-line profitability. The benefits of business consolidation and the benefits of mergers and acquisitions are similar where both can include increased market access, availability of resources and reduced market rivalry to improve performance and lower production costs. This makes consolidation and mergers a lucrative and appealing strategy for Private Equity firms.

In this article we go deeper into a few of the benefits provided through business mergers and consolidation.

Economic Benefits of Mergers and Acquisitions

A question many investors and businesses ask is “What are the economic benefits of mergers & acquisitions?”. To make it simple we’ve pulled this into a list with a brief explanation on what those benefits mean to the business and its performance.

Economic Benefits of M&A

• Scale Efficiency
• Eliminating Redundancy
• Scope Economy
• Resource Allocation

Creating an efficiency of scale will reduce costs and maximize the opportunity for growth in a company, eliminating the redundancies creates massive internal savings and increases speed, economies of scope further reduce redundancy and cost through manufacturing & product alignment and the allocation of resources provides an efficient distribution of operations that maximizes overall performance and profitability. This results in better returns, higher margins, increased market share, stronger competitive advantages and stability in the market.

Another Benefit of Mergers and Acquisitions - Access

One of the most significant benefits of successful mergers and acquisitions is the increased access. Access to what you may ask? Access to Everything!

Access Gained Through M&A

• Products
• Suppliers
• Networks
• Talent

When merging businesses, it’s common that the merged or acquiring business will now be in a position to capitalize on the products the other company manufactures and sells. This could compliment an existing product set or service and could also be innovated against with new access to proprietary information. The same benefits exist when it comes to gaining access to suppliers and networks. A company could move other products into markets they were previously not a part of with this new access.

One of the most significant benefits is the access to new and additional talent. Talent acquisition, training and retention are among the most difficult tasks for a company and merging with or acquiring a business can give a company instantaneous access to a new and seasoned talent pool not previously available.

Using Mergers and Acquisitions as a Strategy

Businesses find Mergers and Acquisitions as a general way to grow their business with less risk and investors find this strategy attractive as well due to its history as a successful vehicle for business growth and profitability. Here at GenX Capital we acquire small to medium-sized profitable and high cash-flowing companies, then leverage our resources, expertise, management and corporate strategy to quickly increase revenue and profits higher, including the strategic consolidation of complementary companies to achieve maximum market value upon exit.

If you’re an investor looking to capitalize on a strategy including mergers and acquisitions or are a business looking to acquire or be acquired then we want to talk!