{"id":588,"date":"2023-02-24T11:35:33","date_gmt":"2023-02-24T11:35:33","guid":{"rendered":"https:\/\/docullyvdr.com\/blog\/?p=588"},"modified":"2023-06-01T14:44:39","modified_gmt":"2023-06-01T14:44:39","slug":"the-10-biggest-reasons-to-pursue-ma","status":"publish","type":"post","link":"https:\/\/www.docullyvdr.com\/blog\/virtual-data-room\/the-10-biggest-reasons-to-pursue-ma\/","title":{"rendered":"The 10 Biggest Reasons to Pursue M&amp;A"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.docullyvdr.com\/blog\/virtual-data-room\/the-10-biggest-reasons-to-pursue-ma\/#What_is_an_Acquisition\" >What is an Acquisition?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.docullyvdr.com\/blog\/virtual-data-room\/the-10-biggest-reasons-to-pursue-ma\/#Motive_1_To_Acquire_New_Technology_or_Expertise\" >Motive 1: To Acquire New Technology or Expertise<\/a><ul class='ez-toc-list-level-5' ><li class='ez-toc-heading-level-5'><ul class='ez-toc-list-level-5' ><li class='ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.docullyvdr.com\/blog\/virtual-data-room\/the-10-biggest-reasons-to-pursue-ma\/#Examples\" >Examples:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.docullyvdr.com\/blog\/virtual-data-room\/the-10-biggest-reasons-to-pursue-ma\/#Examples-2\" >Examples:<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.docullyvdr.com\/blog\/virtual-data-room\/the-10-biggest-reasons-to-pursue-ma\/#Motive_3_Larger_Market_Share\" >Motive 3: Larger Market Share<\/a><ul class='ez-toc-list-level-5' ><li class='ez-toc-heading-level-5'><ul class='ez-toc-list-level-5' ><li class='ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.docullyvdr.com\/blog\/virtual-data-room\/the-10-biggest-reasons-to-pursue-ma\/#Examples-3\" >Examples:<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.docullyvdr.com\/blog\/virtual-data-room\/the-10-biggest-reasons-to-pursue-ma\/#Motive_4_Value_Creation_by_Synergies\" >Motive 4: Value Creation by Synergies<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.docullyvdr.com\/blog\/virtual-data-room\/the-10-biggest-reasons-to-pursue-ma\/#Motive_5_Geographical_Diversification\" >Motive 5: Geographical Diversification<\/a><ul class='ez-toc-list-level-5' ><li class='ez-toc-heading-level-5'><ul class='ez-toc-list-level-5' ><li class='ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.docullyvdr.com\/blog\/virtual-data-room\/the-10-biggest-reasons-to-pursue-ma\/#Examples-4\" >Examples:<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.docullyvdr.com\/blog\/virtual-data-room\/the-10-biggest-reasons-to-pursue-ma\/#Motive_6_Vertical_Integration\" >Motive 6: Vertical Integration<\/a><ul class='ez-toc-list-level-5' ><li class='ez-toc-heading-level-5'><ul class='ez-toc-list-level-5' ><li class='ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.docullyvdr.com\/blog\/virtual-data-room\/the-10-biggest-reasons-to-pursue-ma\/#Examples-5\" >Examples:<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.docullyvdr.com\/blog\/virtual-data-room\/the-10-biggest-reasons-to-pursue-ma\/#Motive_7_Cross-selling\" >Motive 7: Cross-selling<\/a><ul class='ez-toc-list-level-5' ><li class='ez-toc-heading-level-5'><ul class='ez-toc-list-level-5' ><li class='ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.docullyvdr.com\/blog\/virtual-data-room\/the-10-biggest-reasons-to-pursue-ma\/#Examples-6\" >Examples:<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/www.docullyvdr.com\/blog\/virtual-data-room\/the-10-biggest-reasons-to-pursue-ma\/#Motive_8_Taxation\" >Motive 8: Taxation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/www.docullyvdr.com\/blog\/virtual-data-room\/the-10-biggest-reasons-to-pursue-ma\/#Motive_9_The_Financial_Motive\" >Motive 9: The Financial Motive<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/www.docullyvdr.com\/blog\/virtual-data-room\/the-10-biggest-reasons-to-pursue-ma\/#Motive_10_Opportunism\" >Motive 10: Opportunism<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/www.docullyvdr.com\/blog\/virtual-data-room\/the-10-biggest-reasons-to-pursue-ma\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"What_is_an_Acquisition\"><\/span><strong><a href=\"https:\/\/en.wikipedia.org\/wiki\/Acquisition\">What is an Acquisition?<\/a><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<!-- \/wp:post-content -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>An acquisition is&nbsp; a transaction whereby companies, organizations and\/or their assets are acquired for some consideration by another company.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>Managers involved in large M&amp; A deals usually are quite willing to disclose their motives whenever a large transaction is announced. This is to justify the spend to their shareholders and the general public. It gives insight into the thought process behind the deal.As a <a href=\"https:\/\/www.docullyvdr.com\/blog\/virtual-data-room-providers\/\">data room service providers<\/a>, DocullyVDR helps several intermediaries involved in the deal and is used in the transaction.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>The 10 biggest motives with some examples have been provided below to give context to each specific motive.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:paragraph -->\r\n<p><strong><a href=\"https:\/\/www.docullyvdr.com\/\">Data Room Service Providers<\/a><\/strong>, Data Room Pricing, and Data Room Due Diligence&nbsp;&nbsp;Data Room Providers, Data Room M&amp;A, <a href=\"https:\/\/www.docullyvdr.com\/blog\/virtual-data-room\/what-is-an-investor-data-room\/\">Investor Data Room<\/a>, Data Room Software, <a href=\"https:\/\/www.docullyvdr.com\/blog\/virtual-data-room\/secure-file-sharing\/\">Secure File Sharing<\/a><strong>, Virtual Data Room&nbsp; &nbsp;Data Room&nbsp;&nbsp;<br><\/strong><\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:paragraph -->\r\n<p><a href=\"https:\/\/en.wikipedia.org\/wiki\/10_Biggest_Reasons_to_Pursue_M%26A\">10 reasons for companies to acquire or be acquired include<\/a>:<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:heading {\"level\":3} -->\r\n<h3><span class=\"ez-toc-section\" id=\"Motive_1_To_Acquire_New_Technology_or_Expertise\"><\/span>Motive 1: To Acquire New Technology or Expertise<span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<!-- \/wp:heading -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>Industries change and companies also need to evolve to survive , if not, they don\u2019t survive. That\u2019s why companies look out for companies which give them new technologies and expertise. In the future, as the energy transition continues, many of the oil and gas majors will begin investing in renewable energy firms, for example.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:heading {\"level\":5} -->\r\n<h5><span class=\"ez-toc-section\" id=\"Examples\"><\/span>Examples:<span class=\"ez-toc-section-end\"><\/span><\/h5>\r\n<!-- \/wp:heading -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>Google has acquired over 30 artificial intelligence (AI) startups, acquiring a range of capabilities in a technology which is set to give them a head start in the future.&nbsp;The acquisition of Android in 2005 for $50 million, enabled Google to enter the cellular phone market for the first time.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>This acquisition was a huge success as in 2020, the Android operating system was the operating system operating in over 70% of the world\u2019s mobile technology, and this figure is only increasing day by day.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>Pfizer acquired Warner-Lambert for $ 90 Billion<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:paragraph -->\r\n<p><strong>Economies of Scales:<\/strong><\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>The thinking and philosophy behind most M&amp;A deals are that Bigger is often better because it fulfills the economies of scale motive. Bigger corporates enjoy cost savings and competitive advantages that smaller companies usually don\u2019t.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:heading {\"level\":5} -->\r\n<h5><span class=\"ez-toc-section\" id=\"Examples-2\"><\/span>Examples:<span class=\"ez-toc-section-end\"><\/span><\/h5>\r\n<!-- \/wp:heading -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>&nbsp;British Airways has merged with a few different firms over the years to create IAG (International Airlines Group), essentially a conglomerate of airlines which has the largest control over the skies than almost any other airline company.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:heading {\"level\":3} -->\r\n<h3><span class=\"ez-toc-section\" id=\"Motive_3_Larger_Market_Share\"><\/span>Motive 3: <a href=\"https:\/\/docullyvdr.com\/blog\/the-10-biggest-reasons-to-pursue-ma\/\">Larger Market Share<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<!-- \/wp:heading -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>Market share is the most common and obvious reason for most M&amp;A transactions. Companies are constantly looking at where they stand in their industries as compared to their peers and competitors, so acquisitions keeping the market share in mind are never far from the thoughts of CEOs.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>Of course, one drawback is that too much market share or larger market share attracts the ire of antitrust organizations.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:heading {\"level\":5} -->\r\n<h5><span class=\"ez-toc-section\" id=\"Examples-3\"><\/span>Examples:<span class=\"ez-toc-section-end\"><\/span><\/h5>\r\n<!-- \/wp:heading -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>Every big and major retail bank has grown in size through the acquisition of smaller regional retail banks, giving them a power which famously makes them <strong>\u2018<\/strong><strong>too big to fail\u2019<\/strong>.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:heading {\"level\":3} -->\r\n<h3><span class=\"ez-toc-section\" id=\"Motive_4_Value_Creation_by_Synergies\"><\/span>Motive 4: Value Creation by Synergies<span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<!-- \/wp:heading -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>Generally the scale of synergies is too often considered an exaggerated concept. But sometimes, this logic, if not the numbers, makes absolute sense. In 2017, when Amazon acquired Whole Foods, it was a clear attempt for Amazon to harness the power of its e-Commerce business to traditional food retail.Clearly, it was a successful move as within a few hours of the deal, most other food retailers in the US were down by a few percentage points.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>Another example is that of Morgan Stanley\u2019s acquisition of E*Trade could be considered a synergistic acquisition or an acquisition aimed at acquiring technology, as there is considerable overlap. The $13billion deal allowed Morgan Stanley to tap into $56 billion of low cost deposits, data about millions of E*Trade\u2019s customer base, and a powerful new tool to add to Morgan Stanley\u2019s existing portfolio.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:heading {\"level\":3} -->\r\n<h3><span class=\"ez-toc-section\" id=\"Motive_5_Geographical_Diversification\"><\/span>Motive 5: Geographical Diversification<span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<!-- \/wp:heading -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>Another huge value-driver for decades in an M&amp;A deal for businesses has been Geographical diversification:<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>The logic is simple why build a company from scratch in a foreign country or a new terrain, when you can acquire an already cash generating existing entity and use it as a launchpad for your own company\u2019s growth in that country? This is called the roll-up strategy<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:heading {\"level\":5} -->\r\n<h5><span class=\"ez-toc-section\" id=\"Examples-4\"><\/span>Examples:<span class=\"ez-toc-section-end\"><\/span><\/h5>\r\n<!-- \/wp:heading -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>Habyt, biggest European co-living company, became the largest co-living player worldwide after it acquired Hmlet, the biggest Asia Pacific player in communal living.<strong>&nbsp;<\/strong>Another notable and most successful example is that of the Spanish bank Santander. Banco Santander didn\u2019t let Spain\u2019s relatively small population of less than 40 million people at the time its acquisition spree began, to restrict its growth prospects.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>It looked to the Latin American and later, European markets, where its cultural and economic links gave it an advantage.It acquired banking chains in 9 countries outside of Spain to become one of the world\u2019s largest retail banking institutions.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:heading {\"level\":3} -->\r\n<h3><span class=\"ez-toc-section\" id=\"Motive_6_Vertical_Integration\"><\/span>Motive 6: Vertical Integration<span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<!-- \/wp:heading -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>When a company acquires different parts of the value chain in its own business it is called Vertical integration. Typically, it could begin with a company which has grown to a substantial bigger size buying its own distribution chain so that it doesn\u2019t have to hire a third party distribution company.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:heading {\"level\":5} -->\r\n<h5><span class=\"ez-toc-section\" id=\"Examples-5\"><\/span>Examples:<span class=\"ez-toc-section-end\"><\/span><\/h5>\r\n<!-- \/wp:heading -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>A good example of vertical integration was LiveNation\u2019s acquisition of Ticketmaster in 2010, where it acquired Ticketmaster\u2019s retail distribution.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:heading {\"level\":3} -->\r\n<h3><span class=\"ez-toc-section\" id=\"Motive_7_Cross-selling\"><\/span>Motive 7: Cross-selling<span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<!-- \/wp:heading -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>Another popular and powerful way to achieve revenue synergies is by Cross selling. The thought that two companies have more to offer their customers by being together leads to their M&amp;A.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:heading {\"level\":5} -->\r\n<h5><span class=\"ez-toc-section\" id=\"Examples-6\"><\/span>Examples:<span class=\"ez-toc-section-end\"><\/span><\/h5>\r\n<!-- \/wp:heading -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>Starbucks\u2019 acquisition of Teavana for&nbsp;<strong>$750 million<\/strong>&nbsp;in 2017. There couldn\u2019t be a more synergistic idea for increasing revenues than selling tea and coffee together Now, both are winners as you can get tea at Starbucks and coffee at Teavana.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:heading {\"level\":3} -->\r\n<h3><span class=\"ez-toc-section\" id=\"Motive_8_Taxation\"><\/span>Motive 8: Taxation<span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<!-- \/wp:heading -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>Unsurprisingly, tax is one area where companies are not prepared to admit that they\u2019ve entered an M&amp;A deal to avoid taxes.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>It doesn\u2019t reflect well with customers knowing that a company is openly avoiding taxes but be assured: this is one of the most common, but least mentioned explicit motives for M&amp;A. The idea is that a cash flow positive company acquires a firm with carry forward tax losses to reduce its own tax burden.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:heading {\"level\":3} -->\r\n<h3><span class=\"ez-toc-section\" id=\"Motive_9_The_Financial_Motive\"><\/span>Motive 9: The Financial Motive<span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<!-- \/wp:heading -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>Most of the motives for an M&amp;A deal are largely strategic in nature.But at times a company is also bought essentially for its stream of cash flows.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>This is usually happens when a private equity firm is involved in an M&amp;A deal. &nbsp;US investment bank William Blair advised the management of TaskUs Inc. on a sale to private equity giant, Blackstone. Blackstone acquired TaskUs Inc. for a fee in excess of&nbsp;<strong>$500 million<\/strong><strong>.<\/strong><\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:heading {\"level\":3} -->\r\n<h3><span class=\"ez-toc-section\" id=\"Motive_10_Opportunism\"><\/span>Motive 10: Opportunism<span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<!-- \/wp:heading -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>Companies don\u2019t always look for an acquisition when one lands on their doorstep, they look at an M&amp;A when they see an opportunistic deal of getting to buy a company below its intrinsic value. JP Morgan\u2019s 2008 \u2018fire sale\u2019 deal for BearStearns, which it acquired at a supposedly knockdown price, is the best example of a deal that found a company rather than the other way around.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:heading -->\r\n<h3><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<!-- \/wp:heading -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>More often than not, when an M&amp;A Deal materializes, those publicizing it will mention at least one of the motives included above, if not two or three.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:paragraph -->\r\n<p>&nbsp;<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:block {\"ref\":454} \/-->","protected":false},"excerpt":{"rendered":"<p>What is an Acquisition? An acquisition is&nbsp; a transaction whereby companies, organizations and\/or their assets are acquired for some consideration by another company. Managers involved in large M&amp; A deals usually are quite willing to disclose their motives whenever a large transaction is announced. This is to justify the spend to their shareholders and the general public. It gives insight into the thought process behind the deal.As a data room service providers, DocullyVDR helps several intermediaries involved in the deal and is used in the transaction. The 10 biggest motives with some examples have been provided below to give context to each specific motive. Data Room Service Providers, Data Room Pricing, and Data Room Due Diligence&nbsp;&nbsp;Data Room Providers, Data Room M&amp;A, Investor Data Room, Data Room Software, Secure File Sharing, Virtual Data Room&nbsp; &nbsp;Data Room&nbsp;&nbsp; 10 reasons for companies to acquire or be acquired include: Motive 1: To Acquire New Technology or Expertise Industries change and companies also need to evolve to survive , if not, they don\u2019t survive. That\u2019s why companies look out for companies which give them new technologies and expertise. In the future, as the energy transition continues, many of the oil and gas majors will begin investing in renewable energy firms, for example. Examples: Google has acquired over 30 artificial intelligence (AI) startups, acquiring a range of capabilities in a technology which is set to give them a head start in the future.&nbsp;The acquisition of Android in 2005 for $50 million, enabled Google to enter the cellular phone market for the first time. This acquisition was a huge success as in 2020, the Android operating system was the operating system operating in over 70% of the world\u2019s mobile technology, and this figure is only increasing day by day. Pfizer acquired Warner-Lambert for $ 90 Billion Economies of Scales: The thinking and philosophy behind most M&amp;A deals are that Bigger is often better because it fulfills the economies of scale motive. Bigger corporates enjoy cost savings and competitive advantages that smaller companies usually don\u2019t. Examples: &nbsp;British Airways has merged with a few different firms over the years to create IAG (International Airlines Group), essentially a conglomerate of airlines which has the largest control over the skies than almost any other airline company. Motive 3: Larger Market Share Market share is the most common and obvious reason for most M&amp;A transactions. Companies are constantly looking at where they stand in their industries as compared to their peers and competitors, so acquisitions keeping the market share in mind are never far from the thoughts of CEOs. Of course, one drawback is that too much market share or larger market share attracts the ire of antitrust organizations. Examples: Every big and major retail bank has grown in size through the acquisition of smaller regional retail banks, giving them a power which famously makes them \u2018too big to fail\u2019. Motive 4: Value Creation by Synergies Generally the scale of synergies is too often considered an exaggerated concept. But sometimes, this logic, if not the numbers, makes absolute sense. In 2017, when Amazon acquired Whole Foods, it was a clear attempt for Amazon to harness the power of its e-Commerce business to traditional food retail.Clearly, it was a successful move as within a few hours of the deal, most other food retailers in the US were down by a few percentage points. Another example is that of Morgan Stanley\u2019s acquisition of E*Trade could be considered a synergistic acquisition or an acquisition aimed at acquiring technology, as there is considerable overlap. The $13billion deal allowed Morgan Stanley to tap into $56 billion of low cost deposits, data about millions of E*Trade\u2019s customer base, and a powerful new tool to add to Morgan Stanley\u2019s existing portfolio. Motive 5: Geographical Diversification Another huge value-driver for decades in an M&amp;A deal for businesses has been Geographical diversification: The logic is simple why build a company from scratch in a foreign country or a new terrain, when you can acquire an already cash generating existing entity and use it as a launchpad for your own company\u2019s growth in that country? This is called the roll-up strategy Examples: Habyt, biggest European co-living company, became the largest co-living player worldwide after it acquired Hmlet, the biggest Asia Pacific player in communal living.&nbsp;Another notable and most successful example is that of the Spanish bank Santander. Banco Santander didn\u2019t let Spain\u2019s relatively small population of less than 40 million people at the time its acquisition spree began, to restrict its growth prospects. It looked to the Latin American and later, European markets, where its cultural and economic links gave it an advantage.It acquired banking chains in 9 countries outside of Spain to become one of the world\u2019s largest retail banking institutions. Motive 6: Vertical Integration When a company acquires different parts of the value chain in its own business it is called Vertical integration. Typically, it could begin with a company which has grown to a substantial bigger size buying its own distribution chain so that it doesn\u2019t have to hire a third party distribution company. Examples: A good example of vertical integration was LiveNation\u2019s acquisition of Ticketmaster in 2010, where it acquired Ticketmaster\u2019s retail distribution. Motive 7: Cross-selling Another popular and powerful way to achieve revenue synergies is by Cross selling. The thought that two companies have more to offer their customers by being together leads to their M&amp;A. Examples: Starbucks\u2019 acquisition of Teavana for&nbsp;$750 million&nbsp;in 2017. There couldn\u2019t be a more synergistic idea for increasing revenues than selling tea and coffee together Now, both are winners as you can get tea at Starbucks and coffee at Teavana. Motive 8: Taxation Unsurprisingly, tax is one area where companies are not prepared to admit that they\u2019ve entered an M&amp;A deal to avoid taxes. It doesn\u2019t reflect well with customers knowing that a company is openly avoiding taxes but be assured: this is one of the most common, but least mentioned explicit motives for M&amp;A. The idea is that a cash&#8230;<\/p>\n","protected":false},"author":2,"featured_media":589,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-588","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-virtual-data-room"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>10 Reasons Why M&amp;A Can Drive Business Growth<\/title>\n<meta name=\"description\" content=\"Mergers &amp; acquisitions (M&amp;A) are strong tools for driving business growth, top 10 reasons why businesses pursue M&amp;A\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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