What are the rational motives of business acquisition?

Mainly, it should be quite clear that acquisition process will not succeed unless the organization has a declared ”Acquisition Strategy” pointed out by the board and also be approved by the shareholders.

Then to rationally motivates any business acquisition transaction senior management should have a very detailed study to be sure that the transaction in question is:

1-       Adapted and matched with the origination’s acquisition strategy.

2-      The transaction will extend the organization’s market-share, add new products, technology, or minimizing total costs ( all or part of these items).

3-      Bearing a new business or industry model.

 

4-      Will drive the organization’s stocks up to the expected calculated value.

Profit Maximization and Loss Minimization!

The two simple reasons are, gaining more money and acquiring more power. Benefits are:

• eliminate competition.
• gain more customers, especially competitor's customers.
• reduce running costs.

All this leads to increase in profits, which is the main reason behind starting a business.

 

There are many motives behind business acquisation but the primary ones are to increase your profit. Another motive would be expansion in order to meet customers ever growing need.

Thanks for your invitation, Agree on experts.

Rational motives of business acquisition are:

• Fill a void in a portfolio: the objective may be to acquire the product that lacks structure to meet customer needs in a determined area, or to use the ability of a distribution channel,
• In invest surplus: invest a surplus is often the result of underlying growth in the periods that see self-financing margins of the companies recover,
• Strengthen a business unit: the acquisition may be a competitor, supplier, a new distribution channel or a new technology,
• A fourth mobile that is irrational in terms of business but still extremely common, namely the desire deep to build an empire.

Thank you for this question. I will be completely honest with you because I don't like the copy-paste from the internet answers. This subject is one where I don't have a practical experience. So I will leave it open. Best ragards,