Motives behind mergers and acquisitions: From synergy to market dominance
Raghu Marwah, Parul Goel & Akshit Baluni
by Raghu Marwah, Parul Goel and Akshit Baluni
When two companies decide to merge, the announcement rarely arrives with a simple explanation. The stated rationale is almost always synergy – that well-used word which promises the merged entity will outperform what either business could have achieved independently. In practice, this translates into eliminating duplicate functions, pooling underutilised resources, and gaining access to a broader customer base. The logic holds up convincingly on paper. The execution, however, is a different matter.
Speed is frequently the real driver sitting beneath the surface. Building a market presence organically takes years, sometimes decades, but acquiring one that already exists takes a transaction and a signing ceremony. This calculation becomes especially sharp in competitive sectors where late entry can mean permanent disadvantage. Scale plays into it as well – a larger combined organisation tends to carry greater pricing power and considerably more resilience against market volatility. Though regulators scrutinise deals with precisely this outcome in mind, and competitors rarely stand still in response.
Capability gaps explain a surprising number of transactions that might otherwise seem difficult to justify on financial grounds alone. A firm may lack the technology, the specialist talent, or the brand recognition it needs to move into a new segment, and the fastest route to closing the gap is acquiring a company that already possesses it. Internally developing what a competitor has spent a decade building is rarely the efficient path.
Capital efficiency is another quiet motivator that seldom makes the press release. Businesses sitting on surplus funds, particularly those that have recently performed well, frequently turn to acquisitions as a disciplined way to deploy that capital and generate returns that organic reinvestment might not match within a reasonable timeframe. In both cases, the transaction is less about ambition and more about practicality, a recognition that certain assets are simply faster to buy than to build.
Yet the record across industries is uneven enough to demand honest reflection. Integration routinely proves harder than projected at the time of signing. Too many deals have stumbled not because the strategy was wrong, but because the harder work such as blending teams, reconciling systems, and managing expectations was underestimated from the start. Integration has a way of humbling even the most carefully structured transactions. What looks clean in a term sheet rarely stays that way once two organisations are asked to function as one.
Ultimately, the success of an acquisition goes beyond what was paid or promised. It depends on whether the combined entity can convert scale into sustained competitive advantage – strengthening its market position, outpacing rivals, and moving closer to true market dominance rather than merely appearing larger on paper.
The secret sauce is always the people behind the M&A. Having the right team to spearhead the M&A negotiations and deal structure, mitigate due diligence issues, and protect the interests of key stakeholders is critical.
Raghu Marwah, a qualified Chartered Accountant with a Bachelor of Arts (Economics), joined the RNM team after having gained experience at one of the Big 4 firms. He specialises in advising and rendering consultancy services to clients in relation to structuring strategic investments, offshore structuring, cross-border holdings, M&A, and valuations. Contact Raghu.
Parul Goel, a graduate with a Bachelor of Commerce (Honours) from Delhi University and having completed two levels of the CFA program, is an analyst at RNM India. She works with startups and family offices in various areas like strategic investments, valuations, M&A, and cross-border transactions.
Akshit Baluni is a B.Sc. Finance graduate from Narsee Monjee Institute of Management Studies (NMIMS), Navi Mumbai. He holds certifications including CFA Level 2 and NSE Academy Certified Investment Analyst Pro. He works closely with founders on strategic finance initiatives, including M&A advisory and cross-border transactions across diverse sectors.
R.N. Marwah & Co. LLP is a Chartered Accountancy firm that was established in 1946 by the late Mr R.N. Marwah. Its head office is located in Janpath, New Delhi (India). The four major service divisions of the firm are audit & business advisory services, tax & regulatory services, legal & company law services, and consultancy services. It has been serving a huge international and domestic clientele for the last 76 years.
GGI member firmR.N. Marwah & Co. LLP, Chartered AccountantsBangalore, New Delhi, IndiaT: +91 11 4319 2000
Advisory, Auditing & Accounting, Corporate Finance, Tax
