DSNews delivers stories, ideas, links, companies, people, events, and videos impacting the mortgage default servicing industry.
Issue link: http://digital.dsnews.com/i/710085
66 M&As don't just happen, either. Just getting two companies together at a negotiation table is challenging by itself. 66 must be developed to determine how to merge the groups. One company's culture may not be better than the other, but they just have a different way of doing things, and this might not sit well when the companies combine. M&As don't just happen, either. Just getting two companies together at a negotiation table is challenging by itself. Whether a company is being acquired or doing the acquiring, key discussions should be centered on corporate market valuations, financial analysis, definitive agreements, due diligence on operations, technology, legal and compliance structure, client impact, etc. Once a complete review is done, then the companies can start the negotiation process and determine an agreed upon asking price. Mergers and acquisitions are typically agreed upon for multiple reasons. We will discuss a few of the most common reasons in this article. Creating synergies among the involved companies is one of the most common reasons for combining forces. Synergy benefits include improving economies of scale as it relates to the overall business execution within both companies. For example, if both firms have separate human resource departments, more than likely both human resource departments can be combined into one. e end result is cost savings for the new company as resources are combined, therefore eliminating overhead. Market leverage is another key reason why a company might look to diversify its product or service mix either within its current industry or by entering a new industry. When an organization looks at growth opportunities, it can decide to either grow that opportunity organically or look elsewhere, such as acquiring another company that meets the needs of the organization's growth objectives. Time and cost are key considerations when a company determines what its best growth strategies will be. Long- versus short-term strategies always enter into the discussion surrounding market potential and what the best way to obtain market share is. Eliminating the competition, or simply surviving, can be discussed hand-in-hand. Buying a company to eliminate the competition is a key reason to purchase a competitor. is is not necessarily considered a hostile takeover, because the management of the firm being acquired is fully aware of the intentions of the acquiring company. e quickest and most effective way to capture market share for any company is to acquire a competitor. In today's technology-savvy driven marketing approach, acquiring a competitor's client database is considered "priceless." e mortgage industry's M&A activities have been instrumental in developing some of the largest financial institutions in our field. Wells Fargo, for example, strengthened its mortgage position by combining forces with a well-known bank named Wachovia. Centex homes sold their sub-prime entity to Fortress Investments, which is now known as NationStar Mortgage. Assurant Inc. acquired Field Asset Services. NationsBank is now Bank of America, and the list goes on and on. Whether it's a vendor platform, a bank, or a mortgage servicer, the opportunities for future mergers and acquisitions is unlimited. Companies operating within the mortgage industry might have very specific reasons to seek a merger or acquisition with other