The benefits of amalgamation outweigh the reduction in the share of profit to the individual

partner".

One of the main goals of a business owner is the generating of profit; enjoy better economics of
scale as well as the continuity of the business so that future economic benefit can be derived.
Amalgamation is one way of achieving this. Amalgamation can come in the form of merger or
purchase (which results in absorption).

Amalgamation of partnership involves the closure of two or more business firms doing similar
business and starting one new partnership firm. By doing so it increases the size of the business
by pooling together the capital of all partners. It also increases the profitability of the new
business by enhancing the level of business operations. Likewise it has the potential to
minimize some operational expenses associated with partnerships. Additional, when business
of similar interest mergers, it eliminates the competition and they enjoy the benefit of better
managerial skills by introducing new partners in the firm.

By joining their businesses, they are now in a unique position for growth due to its greater
ability to compete. . It also allows for greater diversification as it reduces risk since all the eggs
are no longer in one basket.

As a partnership business, risk is high and there is unlimited liability, death; but a greater share
of profit. Amalgamation reducing risks: eliminates unlimited liability and promotes continuity
and results in better planning and utilization of financial resources ( as they have better access to
debt and equity financing). As well, they may be able to acquire funds at a lower rate of interest.
Ultimately, increase wealth for all.

There is also pitfall of amalgamation to consider, but this discussion was to highlight the
benefits.

Brealey, F.A. & Myers, S.C. (2000). Principles of Corporate Finance.6th edition, McGraw-Hill New York

https://dealroom.net/blog/benefits-of-mergers-and-acquisitions

Kenton, W. (2011, January 13). Amalgamation: Definition, types, how to use, pros and cons.
In Investopedia. https://www.investopedia.com/terms/a/amalgamation.asp