A
Firms acquire, merge, and purchase other companies for various reasons; the main reason is to have improved sales revenue and business gains. The following are the main reasons why firms decide to buy others in the same line:
- To improve their sales concentration by reducing competition
- To enjoy economies of scale that is likely to result from an increased business after the purchase
- To enjoy operational benefits that might be with the sold company
- To consolidate the market and enjoy management efficiencies that might come with the new acquisition
When a purchase is made, both companies conduct the exercise with mutual benefits to have a better company than when they are operating independently.