Mergers and acquisitions are both ways that two companies can join together. While these terms are often used interchangeably, there are some specific differences. These can have a profound impact on the ultimate outcome of business operations.
Mergers and acquisitions can help to expand the market for the resulting company. This can help to boost profitability and make the resulting company more competitive. Understanding the basics of both of these is important if you’re considering one for your business.
What is a merger?
A merger brings two businesses together to form a new company. This usually comes with a new name and new branding for the resulting company. Other factors, such as tax considerations are also present in these situations.
In a merger, most of the employees from both companies are usually kept on board but some may have to shift to new positions or duties because of the merger. Executives and leadership positions will usually combine to include people from both companies that merged together.
What is an acquisition?
An acquisition is a takeover of one business by another business. The company that’s taken over ceases to exist but the company that’s taking it over remains operational. The assets of the taken-over company become absorbed by the other company. Sometimes, an acquisition is considered a hostile act because of how things work during it. In many cases, people are laid off during an acquisition.
Both mergers and acquisitions can lead to big changes for any business, and you should have experienced legal guidance as you restructure or reform your business operations for the best results.