What is a strategic reason for a company to engage in a merger?

A strategic reason for a company to engage in a merger is often to acquire technological capabilities. This is especially relevant in rapidly evolving industries where staying competitive requires access to the latest technologies. By merging with or acquiring another company that possesses advanced technological resources, a firm can enhance its own product offerings, improve efficiency, and drive innovation. This not only creates immediate value through synergies but also positions the company better for future growth.

Acquiring technological capabilities can also lead to increased market share and better product development, which are critical for long-term success. It enables a company to leverage new technologies, streamline processes, and ultimately enhance customer satisfaction.

Other factors such as minimizing operational costs, while beneficial, are typically outcomes of strategic actions rather than the primary driver for mergers. The goal is not simply to eliminate competition or solely increase revenue; instead, acquiring tech capabilities relates more closely to enhancing the company's overall strategic positioning in the marketplace.