Ways for Easy Private Acquisitions

What are Private Acquisitions, I ask?

A Private Acquisition is a process in which one company called the acquirer takes over, or buys another company, called the target through the purchase of the target’s company’s equities.  As evident from the definition itself, private acquisitions are normally spurred by the seller’s desire to do away with the company rather than a purchaser’s desire to pitch in and buy one. It is all on the seller whether he makes a lucrative deal out of it or not. Ways in which a private equity firm can strike a profitable deal out of it are:

Transformational mergers arise out of either need or negotiation, and in certain cases, both. In order to spruce up the strategies and the execution that follows, which culminate into higher, profitable returns, transformational mergers are paving way for favourable, pragmatic returns. 

Then there is a separate set of companies that take mergers as a way of pepping up the competition. Unless the merger is limited to three or four companies, cost cutting can hardly be put at bay. The motive to turn the merger less on price competition and high on ROIC returns can work as far as the merger ropes in a short number. 

Many firms with private equity funds follow the roll out strategy. In this, fragmented markets are pulled in together as they are too small to expand or even achieve middle scale operations. Huddled together, the merging companies are better equipped with resources and strategies and can gain better revenues than what a standalone company can achieve alone. 

You can always make a careful merger by buying a firm at a cost which is lesser than its intrinsic value. Such opportunities are difficult to come by, but shouldn’t definitely be missed for in case the merger thing doesn’t work, it will be not be that great a loss.