Difference between Mergers & Acquisitions By AvenDATA
Manage episode 363567732 series 3317107
Mergers and acquisitions (M&A) are two distinct forms of corporate restructuring that involve combining companies or acquiring one company by another. Let's explore the differences between mergers and acquisitions:
Mergers: A merger occurs when two or more companies mutually agree to combine and form a new entity. In a merger, the involved companies typically merge their assets, liabilities, and operations to create a single, unified organization. Mergers are often characterized by equal partnership and shared control between the merging entities. The purpose of a merger is to leverage synergies, expand market presence, gain competitive advantage, or achieve strategic objectives collectively.
Acquisitions: An acquisition, on the other hand, takes place when one company purchases another company, resulting in the acquired company becoming a subsidiary or part of the acquiring company. In an acquisition, one company, known as the acquirer, obtains a controlling interest in the target company by acquiring its shares or assets. The acquiring company assumes control over the acquired company's operations, assets, and liabilities. Acquisitions are typically driven by the acquirer's strategic goals, such as gaining market share, accessing new markets or technologies, eliminating competition, or achieving economies of scale.
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