What is Merger Growth Strategy?

Merger is the growth strategy where firm acquires a running business and grows through corporate combinations

Friendly merger:
When multiple firms decide to merge through mutual consent. It takes place via negotiation and cooperation

Hostile merger:
When one company acquires another company against its wishes by purchasing a major portion of its share capital in the open market. This is also known as takeover

There are essentially two kinds of mergers and acquisitions: strategic and financial.

A financial merger or acquisition is pursued, as the name implies, for financial reasons—often to pick up some quick cash or as an investment. But I’m not really interested in financial M&As for this particular discussion.

Strategic mergers and acquisitions offer a solution to a different business problem. Perhaps the acquirer is looking to grab a new product line, add some additional facilities, enter a new market, or gain expertise and intellectual property. For professional services firms, a strategic M&A is often about gaining credibility, adding intellectual firepower or changing the balance of power in a particular market.

The bottom line is a strategic merger yields value for both the acquired and the acquiring firm. To reluctantly use a hackneyed phrase, it’s a “win-win” for both parties.