CORPORATE MERGER AND ACQUISITION

Grocery and Supermarket Business

In Uganda, corporate takeover or acquisition has not taken root but it is one of the sure avenues for business sustenance and development. Many entrepreneurs start-up businesses and hold onto them for far too long with the hope of passing them over to their offsprings. This never happens and the business start to decline in production, sales and revenues and its then that they think of exiting through liquidation. The best alternative for such a scenario is to either merge if say you want corporate growth or sell if you are looking at exiting.

If a company decides to take over another one, it’s referred to as an acquisition. The acquiring company will do this by buying either the major shares or the entire ownership stake of the company being taken over. An acquisition is a situation where a larger company acquires another one outright. There are two types of acquisition: hostile and friendly.

A merger refers to a situation where two companies join forces. They can do this for a number of reasons, say a construction company in Uganda can merge with another one in Kenya. By so doing, the companies will be at a position to reach more customers.

Salon and Skin Parlour Business

Why Companies do M&A

Companies merge and acquire for a number of reasons but mainly for the following; they buy companies with the goal of acquiring a competitor and this is common with the technology companies, companies do M&A to create synergies if say one company has 20 clients and another has 30 client, this will give a combined volume of clients, workers and suppliers. The reason companies do M&A is to accelerate growth. Facebook realized that it's legacy platform will start seeing reduced growth. To accelerate its growth, it acquired Instagram and WhatsApp. It also sought to acquire Snapchat before it became a public company.

Other reasons for acquisition are for purely trading purpose. A company may be acquired at a premium price and just needs a little fixing in the HR, marketing and finance and then sold for a hefty margin. This is business trading. Like you can buy a property or car, make some repairs and modifications and sell it at a profit.

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Bar and Restaurant Business

I know many of you are saying why do I have to acquire more businesses yet am failing on this one. My suggestion to you is that; you as an entrepreneur you have made yourself so busy running a business that is meant to be run by the professionals. Your job as an entrepreneur is to move your capital around your businesses. Look at Dr Sudhir Rupaleria he has more than 30 businesses in Uganda and he is just moving his capital never in the nitty-gritty of the businesses.

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