Companies need to grow and expand in order to remain profitable and one way to do this is to acquire other businesses. This can be done through mergers, takeovers or acquisitions in order to create more value; that is, that the combined value of both companies is greater than their individual worth. A merger refers to consolidating two companies into one while a takeover usually refers to one entity purchasing, or taking ownership of another.
Mergers and acquisitions firms are specialists in the field of managing transactions in which the ownership of companies is transferred or where they are consolidated. They provide advice on the many issues that are involved in the merger and acquisition process including performing due diligence, gaining regulatory approval, structuring finance for the deal and identifying strategic objectives, among others. These firms facilitate the process by guiding the purchasing company through the purchase and transformation process and often take a percentage of the transaction cost as a fee.