What is the purpose of a business merger?

A business merger primarily aims to combine the resources of two or more companies to achieve improved efficiency and increased market positioning. When companies merge, they can pool their assets, expertise, and technologies, leading to cost savings and enhanced operational capabilities. This collective approach allows businesses to streamline operations, reduce duplicated functions, and potentially increase their market share.

By merging, businesses can also achieve economies of scale, where the cost per unit decreases as the volume of production increases, making them more competitive in the marketplace. Additionally, a merger can facilitate innovation by combining research and development resources, which can lead to new products or services, ultimately benefiting consumers.

On the other hand, competing solely on pricing does not leverage the full benefits of a merger, and increasing marketing costs does not align with the goal of efficiency. While reducing employee headcount may occur in some mergers, it is not the primary purpose; rather, it is often a side effect of streamlining operations.