What is one way value is created during a consolidation play?

Value is created during a consolidation play primarily through improved cost structure. When companies consolidate, they often seek to streamline operations, eliminate redundancies, and achieve economies of scale. This can lead to lower operational costs and increased efficiency, which directly enhances profitability.

In a consolidation, the combined entity can leverage shared resources, negotiate better rates with suppliers due to increased purchasing power, and optimize processes to reduce waste. Additionally, a more efficient cost structure can enhance competitive positioning in the market, allowing the consolidated entity to invest in growth opportunities or offer better pricing to customers.

The other options don’t directly contribute to value creation in a consolidation context. Increased management turnover may lead to instability and a lack of strategic direction. Reduced market share would generally indicate a decline in business success. Higher employee counts can imply increased costs and inefficiencies, which contradicts the goal of creating value through consolidation.