Question

Define mergers and acquisitions. How do they differ?

Answer 1

A merger is an agreement between two companies which unites two existing companies into one new company. Merger is done to expand a company’s reach, expand into new segments, or gain market share. Merger is done to create value and increase assets.

An acquisition is a corporate decision in which a company buys another company with all or most of the assets or stocks. The acquiring company then assume control of the company. An acquisition occurs when a buying company is buys more than 51% ownership in the acquired company.

Difference between merger and acquisition is that merger occurs when two separate companies combine into a new joint organization. Whereas, an acquisition occurs when a company takeover another company.