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Mergers and Acquisitions
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Mergers and Acquisitions
Mergers and acquisition is a concept in management and strategy that deals with joining or purchasing substantial volume of the shares of the other company. In mergers, two firms come together to form a new entity while in acquisition one company buys the other and absorbs it into the parent organization. Various business operations reasons lead to executives deciding to do a merger. Mergers may be a way to curb competition by purchasing rival firms while some companies may merge to gain customers, increase productivity, and penetrate new outlets. However, before engaging in a merger or acquisition, it is essential to consider various factors such as culture compatibility, product market, and industry perspective. A perfect example of acquisition is when Amazon bought Whole Foods due to Amazon’s influence as a retail giant.
Amazon acquired Whole Foods the Francisco delivery service for $13.7 billion (Valinsky, 2018) which had been a major competitor in the retail sector. The acquisition has accelerated Amazon’s effect as a major competitor and an online shopping retail firm around the world. The move by Amazon will possibly claim various firms that will not be able to withstand the competition. It is essential for an organization to consider various factors before acquiring another company. One is the evaluation of financial capability and liquidity. Amazon is a giant company with a huge financial capacity which made it possible to acquire Whole Foods without running into financial crisis.

The significance of financial stability while making a deal plays a major role. However, mergers and acquisitions are not entirely financial transactions which make an organization misinterpret it. Second is the establishment of goals which helps an organization assess its objectives of acquiring another company. Having the best leadership team also plays a major role while merging or acquiring a new firm. Amazon has portrayed great leadership in its management which enabled it to reduce risks that occur during integration.
References
Valinsky, J. (2018, February 9). 5 ways Amazon has already changed Whole Foods. Retrieved from: https://money.cnn.com/2018/02/09/news/companies/amazon-whole-foods-changes/index.html