Generally, mergers and acquisitions in Dubai are mutually beneficial for both companies. However, there are some differences between the two, which are mainly based on the level of authority of the parties. For example, the power of the acquiring company is usually greater than that of the target company. This makes acquisitions more common.
In acquisitions, the company buys the equity interests of another company. The acquired company remains in the name of the acquiring company and continues its operations under its name. In most cases, the shares of the acquired company are distributed among the shareholders of the two parent companies.
Generally, the companies involved in mergers and acquisitions are of similar size and operations. They usually have similar market interests, and the purpose of the merger is to increase operational efficiency or decrease competition. The companies that participate in the merger may also seek synergies. These synergies can increase revenue, improve product offerings, and expand market share. Acquisitions, on the other hand, may be used to diversify a company, reduce costs, or expand its market share. Acquisitions can also be used to increase profitability, eliminate expenses associated with buying products from suppliers and improve productivity.
Acquisitions tend to be more contentious than mergers. A buyer and seller, along with key advisers, are involved in both processes. Acquisitions can lead to loss of operational control or management turnover. Also, they have a negative connotation. Acquisitions are typically referred to as hostile takeovers, but that is not necessarily true. Acquisitions are based on the same fundamental motives as mergers. Generally, they are used to acquire important assets, diversify a company, and gain more market share.
Mergers, on the other hand, are more complex and involve more legal formalities. The process involves careful discussion and negotiation between the parties involved. The acquiring company can pay for the acquisition with cash or by purchasing the shares of the target company. It will then take over the assets and liabilities of the target company. The target company is often sold for a profit. In some instances, the acquired company may retain its name, if the acquiring company is willing to do so. However, if the acquired company is not willing to sell, it may be forced to do so.