Defining Mergers & Acquisitions

B E N C H M A R K I N T E R N AT I O N A L

BUSINESS SALES: DEFINING MERGERS & ACQUISITIONS

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I N T E RN AT I O N A L

B U SI NESS SALES: DEFI NI NG MERGERS & ACQUISITIONS

Mergers & acquisitions are grouped together in the financial world as they both refer to the consolidation of two or more companies and their assets.

However, although some may use the words interchangeably, the two types of transaction are different from each other.

W H AT I S A M E RG E R ?

A merger is when two or more companies agree to combine under a single umbrella. A merger most often takes place between two companies of relatively equal status, joining together to create a new, bigger company.

The original companies cease to exist as individual entities and a new company is formed under the banner of a single corporate name.

W H AT I S A N AC Q U I S I T I O N ?

The acquired firm does not usually have to alter its organisational structure or change its name following an acquisition. It continues to operate as before but under the umbrella of the larger firm.

Timing is a key consideration when bringing a business to market for a merger, acquisition or any other type of exit strategy.

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An acquisition is when one company purchases another and becomes the legal owner of that business. Typically, larger companies will acquire smaller businesses by obtaining a majority stake or by purchasing the business outright.

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You can read more about the importance of timing by visiting the blog of Benchmark International.