Currently, in the conditions of globalization, competition is intensifying, and many companies face significant problems when trying to enter new markets, obtain strategically important scarce resources, and increase business capitalization. Effective acquisition announcements allow the company to overcome growth difficulties.
Ensuring the Confidentiality of the Acquisition Announcement Process
Limited dissemination of information about the company’s participation in a particular transaction, as well as key information about its business among a narrow circle of people, is one of the main requirements of the owners for organizing a transaction. If this requirement is not met, the initiator of the transaction runs the risk that information about the transaction will “spread out” throughout the market. This can have undesirable consequences both for the transaction itself and for the entire business of the company.
The acquisition announcement begins with the agreement of the terms of the acquisition, which must be dated and signed. The preconditions for acquisition should include, among other things, both the reasons for the merger and the determination of the company’s compensation for the merger. The content of the terms of acquisition announcement is now definitely more precise than in previous legislation. The companies involved in the merger are required to appoint an auditor to issue the terms of the merger prerequisites for each of the companies. Usually, the decision on the merger is made at the General Meeting of the company.
The acquisition announcement enables companies to curb price competition: prices due to competition can be reduced to such an extent that each of the producers receives a minimum profit. However, antitrust laws restrict mergers with clear intent to raise prices. Sometimes competitors may be acquired and then shut down because it is more profitable to buy them out and eliminate price competition than to lower prices below average variable costs, forcing all producers to bear significant losses.
Which Are Five Tips on Writing an Effective Acquisition Announcement?
When composing an acquisition announcement, you should think about its title. An interesting, catchy title affects potential customers like a magnet, forcing them to read the text in its entirety. The headline should act as the front door of the ad. Therefore, it is necessary not only to make it interesting and attractive but also to make it work as a doorman.
- Effective selling text.
It doesn’t matter what you’re selling. The result is always influenced by three factors: price, product photo, and ad title. To write an effective selling text, you need to know your buyer.
- Understand who your customer is.
Honestly, answer the following questions: who is the client (gender, age), what interests him, and what problems does the product solve? The challenge is to understand who your customer is and what they want. This data will be useful to demonstrate the benefits of the product.
The basis for the further development of the acquisitions market in the 21st century is globalization, which is characterized by significant economic, technological and informational development and the orientation of companies to world markets.
After the closing of the transaction, full-scale integration of the acquired company can begin. This is the last step in the M&A process. Because it can be equally intensive to complete the transaction itself, it is important that an integration strategy be developed early on and considered along with the due diligence process in merger transactions.