mergers

Pros and Cons of Mergers

Pros and Cons of Mergers

A merger involves two firms combining to form one larger company; it can occur due to a takeover or mutual agreement. The pros and cons in summary: Advantages of mergers Economies of scale – bigger firms more efficient More profit enables more research and development. Struggling firms can benefit from new management. Disadvantages of mergers Increased market share can lead to monopoly power and higher prices for consumers A larger firm may experience diseconomies of scale – e.g. harder to communicate and coordinate. When looking at mergers it is important to look at…