Mergers and acquisitions are strategic tools that provide avenues to growth, market expansion and competitive advantage. However, they also pose risks and challenges. The intricacies of M&A require understanding by managers and executives to navigate the M&A landscape.

M&As can bring a variety of benefits to the target and the companies that are buying. These include greater economies of scale enhanced distribution and purchasing capabilities as well as accessing new material and nonmaterial resources, capabilities of the corporate, risk diversion, geographic expansion, and much more.

The M&A process can take a lot of time, energy and funds. This means that the companies involved may have to give up other opportunities. Furthermore the merger or acquisition can result in a loss of scale for consumers since the combined market share could force them to pay more for products and services.

An acquisition may be a hostile or friendly transaction. In a hostile transaction companies will pay an amount to the owners of the company they want to acquire above what they think the business is worth. The company that acquires it then takes over the business, eliminating any potential competition and gaining an increase in the market.

The acquiring company may also purchase the assets of the target company and leave the target with nothing other than cash (and maybe some debt, if there is any). In this kind of transaction, the acquiring firm does not usually retain employees of the acquired company. However, it may hire some of its employees and retain the name of the business that was acquired.