Question

List the 3 types of business combinations and define them:

Acquisitions, statutory merger, and statutory consolidation

Answer 1

Acquisition:

A business scenario where in one company acquires all or most of the shares of another company which results in controlling the latter by the former. Generally, acquisition occurs when a company buys more than 50% of ownership in the target company. This provides the acquiring company the decision making powers without the approval of the target company shareholders.

Statutory Merger:

A Statutory Merger is a kind of merger where in one of the companies keeps its own legal entity even after the merger. The another company will cease to exist. This kind of merger is similar to acquisition where in the target company ceases to exist and the acquiring company continues its own legal entity.

Statutory Consolidation:

Statutory Consolidation is a kind of merger where in all the companies that are merged cease to exist and a new legal entity is formed post consolidation.