To obtain synergies
Shareholders will undoubtedly benefit from the merger of two companies. A company, for example, can generally achieve synergy through consolidation because it will add value to the new company formed as a result of the union.
Synergy is a significant benefit that the merged company will receive when they can collaborate. Revenue synergies and cost synergies are the two types of synergies. Revenue synergies boost the company's revenue due to market expansion, product diversification, R&D activities, and other factors.
Diversification
Mergers are a common way for a company to diversify. To reduce the possibility of losses in the company's business, a company can diversify its business activities by entering new markets and offering new products or services, including risk management.
Increase assets and funding
In the case of incorporation, the total tax liability of the consolidated company is less than the tax liability of the company when it was established independently.
Tax reasons
Companies that generate a lot of taxable income can be combined with companies that compensate for any tax losses.
In the case of incorporation, the consolidated company's total tax liability is less than its tax liability when it was established independently.