{"id":53571,"date":"2026-04-03T11:43:42","date_gmt":"2026-04-03T11:43:42","guid":{"rendered":"https:\/\/certifeka-edu.com\/programs\/strategic-planning-module-2\/lessons\/lesson-3-why-do-companies-keep-acquiring-other-companies-through-ma-3-2\/"},"modified":"2026-04-03T11:43:42","modified_gmt":"2026-04-03T11:43:42","slug":"lesson-3-why-do-companies-keep-acquiring-other-companies-through-ma-3-2","status":"publish","type":"lesson","link":"https:\/\/certifeka-edu.com\/ar\/programs\/planning-for-strategic-managers-module-ucam-university\/lessons\/lesson-3-why-do-companies-keep-acquiring-other-companies-through-ma-3-2\/","title":{"rendered":"Lesson 3: Why Do Companies Keep Acquiring Other Companies Through M&A?"},"content":{"rendered":"
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Lesson 3: Corporate Strategy – Part Two<\/h2>\n
Why Do Companies Keep Acquiring Other Companies Through M&A?<\/h3>\n
Two of the key drivers of capitalism are competition and growth. When a company faces competition, it must both cut costs and innovate at the same time. One solution is to acquire competitors so they are no longer a threat. Companies also complete M&A to grow by acquiring new product lines, intellectual property, human capital, and customer bases. Companies may also look for synergies. By combining business activities, overall performance efficiency increases, and overall costs drop as each company leverages the other company’s strengths.<\/h5>\n
Companies also complete M&A to grow by acquiring new product lines, intellectual property, human capital, and customer bases. Companies may also look for synergies. By combining business activities, overall performance efficiency increases, and overall costs drop as each company leverages the other company’s strengths.<\/h5>\n
What Is a Hostile Takeover?<\/h3>\n
Friendly acquisitions are most common and occur when the target firm agrees to be acquired; its board of directors and shareholders approve of the acquisition, and these combinations often work for the mutual benefit of the acquiring and target companies.<\/h5>\n
Unfriendly acquisitions, commonly known as hostile takeovers, occur when the target company does not consent to the acquisition. Hostile acquisitions don’t have the same agreement from the target firm, and so the acquiring firm must actively purchase large stakes of the target company to gain a controlling interest, which forces the acquisition.<\/h5>\n
How Does M&A Activity Affect Shareholders?<\/h3>\n
Generally speaking, in the days leading up to a merger or acquisition, shareholders of the acquiring firm will see a temporary drop in share value.<\/h5>\n
At the same time, shares in the target firm typically experience a rise in value. This is often due to the fact that the acquiring firm will need to spend capital to acquire the target firm at a premium to the pre-takeover share prices.<\/h5>\n
After a merger or acquisition officially takes effect, the stock price usually exceeds the value of each underlying company during its pre-takeover stage. In the absence of unfavorable economic conditions, shareholders of the merged company usually experience favorable long-term performance and dividends.<\/h5>\n
Note that the shareholders of both companies may experience a dilution of voting power due to the increased number of shares released during the merger process.<\/h5>\n
This phenomenon is prominent in stock-for-stock mergers, when the new company offers its shares in exchange for shares in the target company, at an agreed-upon conversion rate. Shareholders of the acquiring company experience a marginal loss of voting power, while shareholders of a smaller target company may see a significant erosion of their voting powers in the relatively larger pool of stakeholders.<\/h5>\n
What Is the Difference Between a Vertical and Horizontal Merger or Acquisition?<\/h3>\n
Horizontal integration and vertical integration are competitive strategies that companies use to consolidate their position among competitors.<\/h5>\n
Horizontal integration:<\/h5>\n
Horizontal integration is the acquisition of a related business. A company that opts for horizontal integration will take over another company that operates at the same level of the value chain in an industry—for instance when Marriott International, Inc. acquired Starwood Hotels & Resorts Worldwide,<\/h5>\n
Vertical integration:<\/h5>\n
refers to the process of acquiring business operations within the same production vertical. <\/h5>\n
A company that opts for vertical integration takes complete control over one or more stages in the production or distribution of a product.<\/h5>\n
Example<\/h3>\n
Apple, for example, acquired AuthenTec, which makes the touch ID fingerprint sensor technology that goes into its iPhones<\/h5>","protected":false},"comment_status":"open","ping_status":"closed","template":"","class_list":["post-53571","lesson","type-lesson","status-publish","hentry"],"yoast_head":"\nLesson 3: Why Do Companies Keep Acquiring Other Companies Through M&A? - Certifeka-edu<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/certifeka-edu.com\/ar\/programs\/planning-for-strategic-managers-module-ucam-university\/lessons\/lesson-3-why-do-companies-keep-acquiring-other-companies-through-ma-3-2\/\" \/>\n<meta property=\"og:locale\" content=\"ar_AR\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Lesson 3: Why Do Companies Keep Acquiring Other Companies Through M&A? - Certifeka-edu\" \/>\n<meta property=\"og:description\" content=\"Lesson 3: Corporate Strategy – Part Two Why Do Companies Keep Acquiring Other Companies Through M&A? 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