{"id":425,"date":"2023-05-27T23:01:18","date_gmt":"2023-05-27T16:01:18","guid":{"rendered":"https:\/\/www.lawimp.com\/?page_id=425"},"modified":"2023-06-02T08:40:58","modified_gmt":"2023-06-02T01:40:58","slug":"mergers-and-acquisitions","status":"publish","type":"page","link":"https:\/\/www.lawimp.com\/id\/mergers-and-acquisitions\/","title":{"rendered":"Mergers and Acquisitions"},"content":{"rendered":"\n
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Mergers and acquisitions are two of the most misunderstood words in the business world. Both terms often refer to the joining of two companies, but there are\u00a0key differences\u00a0involved in when to use them.<\/span><\/p>\n

A\u00a0merger\u00a0occurs when two separate entities combine forces to create a new, joint organization. Meanwhile, an\u00a0acquisition\u00a0refers to the\u00a0takeover\u00a0of one entity by another. Mergers and acquisitions may be completed to expand a company\u2019s reach or gain market share in an attempt to create\u00a0shareholder value.<\/span><\/p>\n

Mergers<\/span><\/h2>\n

Legally speaking, a merger requires two companies to\u00a0consolidate into a new entity\u00a0with a new ownership and management structure (ostensibly with members of each firm). The more common\u00a0distinction to differentiating a deal\u00a0is whether the purchase is friendly (merger) or hostile (acquisition). Mergers require no cash to complete but dilute each company’s individual power.<\/span><\/p>\n

In practice, friendly mergers of equals do not take place very frequently. It’s uncommon that two companies would benefit from combining forces with two different CEOs agreeing to give up some authority to realize those benefits. When this does happen, the stocks of both companies are surrendered, and new stocks are issued under the name of the new business identity.<\/span><\/p>\n

Typically, mergers are done to reduce operational costs, expand into new markets, boost revenue and profits. Mergers are usually voluntary and involve companies that are roughly the same size and scope.<\/span><\/p>\n

Acquisitions<\/span><\/h2>\n

In an acquisition, a\u00a0new company\u00a0does not emerge. Instead, the smaller company is often consumed and ceases to exist\u00a0with its assets becoming\u00a0part of the larger company.\u00a0<\/span><\/p>\n

Acquisitions, sometimes called takeovers, generally carry a more negative connotation than mergers. As a result, acquiring companies may refer to an acquisition as a merger even though it’s clearly a takeover. An acquisition takes place when one company takes over all of the operational management decisions of another company. Acquisitions require large amounts of cash, but the buyer’s power is absolute.<\/span><\/p>\n

Companies may acquire another company to purchase their supplier and improve economies of scale\u2013which lowers the costs per unit as production increases. Companies might look to improve their market share, reduce costs, and expand into new product lines. Companies engage in acquisitions to obtain the technologies of the target company, which can help save years of capital investment costs and research and development.<\/span><\/p>\n

Since mergers are so uncommon and takeovers are viewed in a negative light, the two terms have become increasingly blended and used in conjunction with one another. Contemporary corporate restructurings are usually referred to as\u00a0merger and acquisition\u00a0(M&A) transactions rather than simply a merger or acquisition. The practical differences between the two terms are slowly being eroded by the new definition of M&A deals.<\/span><\/p>\n

Real-World Examples of Mergers and Acquisitions<\/span><\/h2>\n

Although there have been numerous mergers and acquisitions, below are two of the most notable ones over the years.<\/span><\/p>\n<\/div><\/div>\n<\/div><\/div><\/section>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"class_list":["post-425","page","type-page","status-publish","hentry"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.lawimp.com\/id\/wp-json\/wp\/v2\/pages\/425","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lawimp.com\/id\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www.lawimp.com\/id\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/www.lawimp.com\/id\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lawimp.com\/id\/wp-json\/wp\/v2\/comments?post=425"}],"version-history":[{"count":2,"href":"https:\/\/www.lawimp.com\/id\/wp-json\/wp\/v2\/pages\/425\/revisions"}],"predecessor-version":[{"id":743,"href":"https:\/\/www.lawimp.com\/id\/wp-json\/wp\/v2\/pages\/425\/revisions\/743"}],"wp:attachment":[{"href":"https:\/\/www.lawimp.com\/id\/wp-json\/wp\/v2\/media?parent=425"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}