Acquisition refers to the corporate action where one company buys a share of another company either wholly or partially to control it. The acquiring company gets the assets and stock of the target company thus taking over decision making without approval from the shareholders of the target company. Acquisitions have many advantages as well as disadvantages. Acquisitions can be made in an attempt to reduce competition and focusing on gaining from synergy.
Bradburgers acquisition of Kadri’s Kebabs will have a bundle of advantages for Bradburgers. First, the goals of Bradburgers and Kadri’s Kebabs are similar in that they are targeting fast foods consumers. The acquiring company, Bradburgers, will benefit most given that Kadri’s Kebabs have been indicated to be of superior quality. Consequently, Bradburgers will ride on the kebabs superior quality to attract more customers and boost revenues.
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Gains are another important consideration while making acquisitions. Acquiring Kadri’s Kebabs will make Bradburgers enjoy economies of scale in their production of fast foods. Economies of scale are an important aspect for the growth of a company and useful in reducing costs of production.
Geographically, it will be advantageous for Bradburgers to acquire Kadri’s Kebabs since their location is centralised and thus it will make it easier for communication, management and coordination of activities from Bradburgers without necessarily setting up another office. Given the geographical advantage, it will make it simpler to achieve the gains resulting from the centralisation of communication and operations.
Importantly in acquisitions, growth is paramount to consider. Bradburgers acquisition of Kadri’s Kebabs will be advantageous since it will be possible to ride on the excellence of the kebabs produced by the brothers, therefore, opening new markets and boosting revenues.
However, the acquisition of Kadri’s Kebabs by Bradburgers may be disadvantageous given that the culture of the two companies may be different. Genes of a company define the culture the company adopts. Merging or acquiring a company with a differing culture may pose challenges in the initial stages of acquisition.
