There are several mergers and business acquisitions taking place in the world today. Both small and large companies merge to save costs and gain an increased market share. This helps them to become financially stronger. The companies that go ahead with the merger attain savings as the fixed costs of the company spread over large volumes this decreases the costs of units produced and improves profit margins that can be achieved by negotiating on reduced input costs. Now, the question here is do these mergers affect the consumers in the market? Are these effects negative or positive?
Larry Polhill- what does an expert say?
Larry Polhill served as the Chairman and was the owner of Photocircuits Corporation. He is the President, Chief Executive Officer and Chairman of the Board at American Pacific Financial Corp or APFC. Larry Polhill has more than 25 years of invaluable experience at APFC with an extensive knowledge of corporate acquisitions and business mergers. He has been a Director for several businesses with deep knowledge on SEC and securities. He provides valuable insights into commission and exchange. When it comes to the question of mergers affecting consumers in the market, he says that the effects depend upon the levels of market competition and the industry niche. He also guides investors in businesses so that they get profitable deals.
Prices in the market – how are they affected?
When one competitor is eliminated in the market., the rest of the companies in the industry might go ahead to increase prices of products and services. For instance, if two gas stations enter into a merger, there is a shortage of one gas station and so the remaining gas stations will subsequently increase prices. However, this is just one case. Another instance could be the merged company may pass on reduced cost savings to consumers by giving them reduced costs. Like, a small retail shop merging with another retail store could result in reduced procurement costs for the new company. This will pass over more savings to the consumers. On the other hand, if this merger gives only one or two retailers in the whole market, the small and individual business customers could be made to pay more.
Choices and variety available for the consumers
Business mergers again can increase or reduce the number of choices made available to the consumers in the market. For instance, the merger of two airline companies can decrease the available routes to specific destinations. Again, the combined company can save costs and enter competition with other airline companies that provide consumers with discounted rates.
Larry Polhill adds that when two business companies merge they can affect the choices that consumers make. Therefore, it is crucial for you as a business owner to take the help of professionals who are skilled in the matter of corporate mergers. The same rule also applies to corporate acquisitions. This helps to improve diversity and lower prices in the market. Larry Polhill has experience in the field and recommends businesses to always speak to experienced professionals before getting into a merger or an acquisition.