What it is
Merger is when two or more entities, usually operating within the same field, become one with the approval of both companies’ boards of directors. There are various types of mergers, namely: horizontal, vertical, congeneric, and conglomeration.
Acquisition, on the other hand, is when a company or a group acquires or buys another company or group, obtaining the majority stake. Acquisition does not cause any changes in the legal structure or company name.
How it affects your business
Merger and acquisition are strategic actions by companies and can add considerable growth when done right, as they involve several processes from valuation to negotiation and closing. It could add expertise and create synergy that makes the value of the combined companies greater than the sum of the two.
When it comes to mergers, the two companies combine their operations to form a larger company. Although there are different types of mergers, horizontal might be the most common, as it involves two companies that are in direct competition, share the same products, and operate within the same market.
At XB4, our partners have a wealth of experience working on M&A. They led several high profile M&A transactions within the region and around the world.
We help our clients in assessing whether the merger and acquisition is the right or wrong move by working with our networks of partners around the globe to identify the right party based on our client’s strategy and requirements. We also work closely with clients to help them acquire reliable data and information.
However, acquisitions mainly involve a company buying another with cash, stock, or both, or by acquiring all of its assets. In acquisition, a new entity does not emerge; rather, the acquired entity is taken over by a larger one which takes charge of its operational management decisions.