Merger and acquisition activity (M&A) often dominated business news headlines, but what exactly does M&A mean? Put simply, it’s the consolidation of two or more companies into a single entity. Mergers occur when two companies mutually agree to combine resources, whereas acquisitions involve the purchase of one company by another, often by force.
There are specialist teams at investment banks and auditors who’s only responsibility is to facilitate M&A activity, evaluating the merits of the proposed deal, the form in which it should be conducted, the financing required to make it happen, along with potential legal and tax ramifications.
ausbiz keeps investors across the latest in M&A news, utilising our network of industry experts in Australia and other financial centres around the world. You’ll know what companies are being hunted, what entity is doing the stalking, and what companies could be next in line.
Understanding M&A
When it comes to generating excitement in financial markets, few things can surpass M&A news. Whether welcome or hostile, or a merger of equals, there’s something about the big sums of money being splashed around – be it cash or new shares - that can influence sentiment across many different markets.
Growth via M&A can instantly change the outlook for a company’s revenues, earnings, profit and dividends, providing access to existing and potential customers and markets.
But there’s also execution risk. If acquisition goes wrong, it can be a costly experience for both management and shareholders.
M&A on ausbiz
With a combined 150+ years of either covering or working in markets, the on-air team at ausbiz has seen plenty of takeover news before. We know what questions should be asked of company executives and analysts when M&A occurs, providing our audience an opportunity to evaluate the proposed deal themselves.
M&A activity is also cyclical, just like markets and economies. Typically, activity begins to accelerate once the bottom of the economic cycle has been reached, coinciding with reduced borrowing costs and improved clarity on the operating environment ahead. However, the fear of missing out (FOMO) often triggers company boards to rush deals that would otherwise be deemed marginal, often resulting in poor outcomes when the economic cycle turns.
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