Mergers and Acquisitions (M&A) is a general term that refers to the consolidation of companies or assets. M&A may include different transactions, such as:

MERGERS, in a merger, the boards of directors for two companies approve the combination and seek shareholders’ approval. Then, the acquired company ceases existence and becomes part of the acquiring company.

ACQUISITIONS of the company, the acquiring company obtains the majority stake in the acquired firm, which does not change its name or legal structure.

ACQUISITIONS of assets, one company acquires the assets of another company, this usually happens in the case when the acquired company is insolvent or bankrupt.

DIFFERENCE BETWEEN MERGERS AND ACQUISITIONS

• In the case of Mergers, two separate companies with equivalent and comparable forces come together, whereas, an Acquisition refers to the purchase of a smaller entity by a larger one.
• In the case of Mergers, all together a new company is formed, whereas, in the case of Acquisitions, only the existing company is modified, no formation of the new company is done.
• AMerger requires two companies to consolidate into a new entity with a new ownership and management structure (ostensibly with members of each firm). An acquisition takes place when one company takes over all of the operational management decisions of another.
• The more common interpretive distinction rests on whether the transaction is friendly (merger) or unfriendly (acquisition).