What is a benefit of a merger for businesses?

A merger can lead to reduced competition in the market, which is a significant benefit for businesses. When two companies combine, they often eliminate a competitor, which can allow the merged entity to increase its market share and pricing power. This can result in higher profits since consumers have fewer alternatives. Additionally, with reduced competition, the merged company may find it easier to achieve economies of scale, ultimately leading to cost savings on production and operational efficiencies.

While reduced competition can lead to advantages for the merging companies, other options suggest drawbacks. Increased taxes on profits would be more of a financial burden rather than a benefit. More complex management structures can complicate decision-making and may detract from operational efficiency. Decreased consumer interest generally would not be a positive outcome, as it can signify a loss of market appeal or customer loyalty, which could harm the business's overall success. Thus, the concept of reduced competition stands out as a primary advantage associated with mergers.