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What mergers mean financially

When companies merge it means a whole new beginning in many ways.It means changes within two different companies and also the birth of new ideas.Also means changes financially.

There are many people that will be affected financially by a merger.These include the company that is purchasing the other company, the company that is being purchased, and also the stock holders of both of the companies.

Here is a look at the financial advantages and disadvantages for each of these people.Some will be more at an advantage than others, it all depends on the intentions of the companies involved.

The purchasing company

They have done months of research to decide whether this is going to a profitable idea or not.They have employed extra people that are only focused on the merge at hand.They are very well qualified and know how to make a good decision.

The company knows that the merge is going to be advantageous to them, of they would back out.When the company closes the deal, they know that it is a whole new business venture for them to pursue.It means that they are out to make their new business profitable enough to have been worth all of the time and money it took to acquire.

The two companies have now become one, either under the name of the purchasing company or under a whole new name.It also means that they have great potential to increase the value of the new developing company.The company should be looking at this as a new start and it should be treated with the all of the attention it deserves to be successful.

The purchased company

For the purchased company's employees, the outcome is really anyone's guess.If the company was not performing well, there is a good chance that the new company will start over with a new staff, or use their staff to make the necessary changes.If the company was still performing successfully then the staff might be able to keep their jobs, just getting their paychecks signed by a new company.

The company name usually disintegrates, which can mean that loyal customers are lost and the profits that they created go with them.Although, if a very well known company merges with another well known company, sometimes they combine the names so that neither is forgotten and loyalty can be held on to.The purchased company may see an increase in profits from the changes made by the purchasing company.

The stock holders

These are the people that have to sit back and watch all of the changes that take place.The stock holders are sometimes skeptical of a merger, but they are not as risky as other business ventures, such as buyouts.

Stock holders usually will be able to see an increase in their stocks, especially if the merge led to increased profits like it was supposed to.The money they have invested is usually safe, but sometimes a merger ends in disaster.The odds are usually in the stock holder's favor.

If done right, a merger can prove to be profitable all the way around.It can create growth for all of those that have a financial interest in the deal.Having the right people and finding the right time for a merger to take place can make all of the difference in the world.

No one is secured to benefit when a merger happens, just like any business venture there are risks involved.There has usually been enough research that someone stands to benefit, but there are never any guarantees in the crazy world of business.

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