Businesses often form alliances and partnerships with other businesses that increase profitability for both. Where two businesses complement each other well, the relationship can grow quite deep, until the next logical step is for one to buy out the other or for them to merge, creating one entity out of two.
Example of Business Partnering
Business partnering can lead to acquisition based on an accessory or cross market item that can improve a company’s product or service. The technology would complement the company’s line of products. Sometimes another company’s technology is so important that it becomes integral to most of the company’s products, helping to drive their sales volume.
If the two companies develop a close working relationship and employees possibly interact with the other company’s personnel, the conditions are right for a merger. Usually, the other company is of value them, and to their distributors.
Understanding How the Other Company Integrates with the Business
It is key for a CEO to understand how another company’s core technological competencies or services integrate with their business. It just makes sense to acquire the company to control access to their technology, for instance.
If a CEO understands the value of the partner company as a business, they can bid for them with a realistic price. Once the merger and acquisition is complete, the example of the technology they now own can continue to be distributed under their own name or the original company’s name as products if they do not compete with the parent company
Mergers occur when businesses choose to integrate their resources, their strengths and weaknesses synergistically to leverage each other’s unique characteristics to produce a business that is better than the two companies as separate entities. If you are considering a merger, get help from our qualified Palm Springs mergers and acquisitions firm.
