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Mergers and Acquisitions M&A

Mergers and acquisitions (M&A) form an important part of companies' strategies. The possible motives for M&A are varied.

They include:

  • A search for efficiency gains through new combinations of material and immaterial assets,
  • A drive to increase market shares and market power,
  • A desire to safeguard access to important inputs,
  • A search for access to new technologies and know-how,
  • A drive to gain access to new customer groups or new geographic markets,
  • A desire for diversification.

Affecting all of us

M&A merit special attention, because they affect all of us in the EU, whether we are consumers, entrepreneurs, academics, regulators or policymakers. Consumers may or may not benefit from mergers and acquisitions. The pooling of assets through M&A can lead to efficiency gains, with benefits to consumers if the gains are passed on in the form of lower prices, higher quality or new products and services. However, if mergers and acquisitions are not controlled by an effective competition policy they may lead to excessive market concentration and anti-competitive behaviour, so that consumers find themselves paying higher prices or faced with poorer quality goods and services.

Businesses, for their part, need to follow M&A activities in order to respond to new economic conditions and changes in the strategies of their competitors, which often involve mergers and acquisitions. The importance of M&A can be seen from the extremely high ratio of cross-border M&A values to foreign direct investment worldwide (over 85% in 2000). Multinationals, in particular, need information on where, in what form and why competitors are investing so that they can make effective investment decisions themselves.

Lastly, academics, regulators and policymakers need to understand companies’ strategies and their impact on economic performance so that they can design and implement policies which will help increase prosperity and raise living standards over time.

M&A notes by ECFIN

For these reasons, the Directorate-General for Economic and Financial Affairs monitors and analyses world-wide M&A activity, with a particular emphasis on transactions involving EU firms. The results are published twice yearly in the M&A Note. The first part of each note gives a broad overview of recent trends, while the second part is devoted to a deeper analysis of a specific topic, which varies from issue to issue, such as the efficiency gains from mergers or the effect of the Internal Market on cross-border mergers and acquisitions.