Mergers and acquisitions are often used synonymously, even though the two are different in many ways. Superior Mergers and Acquisitions advisory firms note these key differences:
- What is a merger? – A merger is a transaction during which two separate entities join forces to fuse into a new business entity. The resulting new entity has a new ownership structure and new management that is usually composed of the managers of the two merging companies. This type of transaction is generally considered to be a friendly deal, with both parties looking forward to the synergy and believing it to be beneficial;
- What is an acquisition? – An acquisition usually deals in which one company takes over another company without a new business entity. The transaction usually takes place between a larger company, in the role of the acquirer, looking for a way to have access to technology client base or market share, and a smaller firm that is taken over. During the process, the firm that is being acquired hands over all its operations, client base, and assets. The transaction usually involves significant amounts of money paid to the owners of the acquired company by the acquirer.