Consolidation (business)

In business, consolidation or amalgamation is the merger and acquisition of many smaller

companies into a few much larger ones. In the context of financial accounting, consolidation

refers to the aggregation of financial statements of a group company as consolidated financial

statements. The taxation term of consolidation refers to the treatment of a group of companies

and other entities as one entity for tax purposes. Under the Halsbury's Laws of England,

'amalgamation' is defined as "a blending together of two or more undertakings into one

undertaking, the shareholders of each blending company, becoming, substantially, the

shareholders of the blended undertakings. There may be amalgamations, either by transfer of two

or more undertakings to a new company, or to the transfer of one or more companies to an

existing company".

Consolidation is the practice, in business, of legally combining two or more organizations into a single

new one. Upon consolidation, the original organizations cease to exist and are supplanted by a new entity

Economic motivation

 Access to new technologies/techniques

 Access to new clients

 Access to new geographies

 Cheaper financing for a bigger company

 Seeking for hidden or nonperforming assets belonging to a target company (e.g. real

estate)

 Bigger companies tend to have superior bargaining power over their suppliers and clients
 Synergies