Investors often overlook the importance of mergers and acquisitions (M&A) in their investments. M&A can help to turbocharge revenue growth faster than organic revenue, which may increase in many cases. It can help diversify and expand a business's operations, increase its market share, better facilitate vertical integration, and even offer tax benefits.
Targeting companies for investment with either a history of M&A activity or planned activity in the future can be difficult because it's not always possible to know how that company will fare before, during, and after it merges with or acquires another. Still, investors who are optimistic about the medium- or long-term prospects of a firm that plans to absorb another should certainly factor this into their evaluations of potential investment targets.
