There are numerous reasons for a company to peruse M and A. Some of them are listed below:
- The M and A are undertaken to achieve specific financial, business and strategic objectives to strengthen current operations and spread into new markets. These transactions can substantially change a company's income statement, balance sheet and public profile.
- Executing on a set of corporate objectives is the most important constituent of merger and acquisition whereas creating value with the transaction is considered as additional gain. The key factor becomes the pre and post merger integration.
Therefore, while individual considers mergers and acquisition as an approach for growth, it is sensible to assess the potential transaction in the perspective of the internal option. There are, however, a few typical M and A drawbacks:
- Many mergers failed due to an unclear or a wrong M and A strategy, leading to over payment and time extension.
- Due diligence is limited only to commercial financial data, which leads to un-assumed problems.
- Integration/separation environment are very uncertain after the deal is closed.