The use of M&A has proved successful as a strategy of addressing the collapse of oil prices in the oil and gas industry. M&A contributes to the creation of cost synergy. Cost synergy generates creation of value by minimizing costs and improving the efficiency of capital in energy companies thus influencing on oil prices. Additionally, M&A contributes to development of better economies of scale, establishment of effective markets for oil and gas, and effective use of resources. These factors will benefit the energy sector by enhancing growth of the companies through generating better products in the market and investing in new ideas. Therefore, a successful merger or acquisition will foster increased profitability and promote a sustainable competitive advantage. Additionally, M&A will increase strategic transaction and improve capital efficiency within the energy sector (Yılmaz & Tanyeri 2016, pp.110-117).
The use of M&A as a strategy to address the drop in oil prices will increase the number of investors within the energy sector. The drop of oil prices had resulted in decreased willingness of…….
The post Benefits of using M&A as a Strategy within the Energy Sector
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