Mergers and acquisitions have one common goal of creating synergy that makes the value of the combined companies greater than the sum of the parts - Analyse briefly to focus on the visible benefits of such combinations.

All mergers and acquisitions (M&A) have one common goal, i.e., they are all meant to create synergy that makes the value of the combined companies greater than the sum of the two parts. The success of a merger or acquisition depends on whether this synergy is achieved or not. Synergy may be in the form of revenue enhancement and cost savings. By merger, the companies expect to reap the following benefits: Becoming bigger: Many companies use M&A to grow in size and leapfrog their rivals. While it can take years or decades to double the size of a company through organic growth, this can be achieved much more rapidly through mergers or acquisitions, i.e., through inorganic growth. Domination: Companies also engage in M&A to dominate their respective sector/ industry. However, since a combination of two behemoths may result in a potential monopoly, such a transaction may have to face regulatory challenges. Tax benefits: Companies also use M&A for tax purposes, although this may be an implicit rather than an explicit motive. Economies of scale: Mergers also translate into improved economies of scale which refers to reduced costs per unit that arise from increased total output of a product. Acquiring new technology: To stay competitive, companies need to stay on top of technological developments and their business applications. By buying a smaller company with unique technologies, a large company can maintain or develop a competitive edge. Improved market reach and industry visibility: Companies buy other companies to reach new markets and increase their revenues and earnings. A merger may expand two companies' marketing and distribution channels thereby giving new sales opportunities. A merger can also improve a company's standing in the investment community, i.e., bigger firms often have an easier time raising capital than smaller ones.