Whether you’re a shareholder, employee, or customer, mergers and acquisitions affect the way you do business and where you invest your money. Stepping into the world of mergers and acquisitions can be overwhelming if you don’t understand the terminology of these business deals. Here are four reasons to take some time to learn the important terms of mergers and acquisitions.

Follow Along
Mergers and acquisitions rarely happen overnight, so you will be following the progress of these deals for quite some time. You want to feel confident about what is happening, yet the terminology can have you deciphering words instead of comprehending the business deal. Having even a basic understanding of important terms in mergers and acquisitions allows you to process the information more effectively.

Anticipate the Future
Important terms in mergers and acquisitions, such as accretion and dilution, help you understand what may happen to share prices after the deal is complete. Not only do shareholders need to understand this, but also employees and customers who want to know that the business will be stable for the long term. Other terms, such as economies of scale, describe the restructuring of the companies involved in the business deal, and this ultimately affects operations and customer satisfaction.

Make Sound Financial Decisions
If you are a shareholder or considering an investment in a company that is a party to a merger or acquisition, there are important terms that can guide your choices. Intrinsic value, for example, describes a cash flow value on a per-share discounted basis. Hostile takeovers tell you that some of the top management at the company being acquired or merged may leave the company, causing instability and uncertainty.

Enjoy the Process
One of the best reasons to be familiar with important terms in mergers and acquisitions is to help you enjoy the process. Even if the deal represents a less than ideal outcome from your perspective, you have the confidence and insight to stay one step ahead of most other shareholders and potential investors. Don’t be intimidated by the language of mergers and acquisitions. Just take some time to learn the important terms, and you will feel much more comfortable.