Mergers and acquisitions tend to get easily defined as being as below.
Merger: When two companies of around equal size, decide that joining together will be profitable and make a deal to do so. Both surrender stocks and then new stock is issued to the two together.
Acquisition: When a smaller company (usually struggling financially) gets bought by a larger one, who then acquires all of their stock and swallows it as part of their business (renaming it and so on).
Acquisitions tend to be pretty cut and dry in the sense that one party always buys the other out. This can often be friendly and agreed by both, but sometimes a company is bought out even if it is hostile to the idea: sometimes there can be little other choice.
Mergers have several different types though, which means that you need to look into all of the definitions before deciding which one you may want to enter into, if this is something that is on your agenda. Essentially there are two ways to go about a merger, which is what will define it the most. This is whether it is a purchase merger or a consolidation merger. Basically, whether one technically buys out the other, but they agree for it to be known as a merger, or whether they become a completely new company together. On top of this though, there are:
Horizontal Merger: This is where two companies on the same level merge, so two that have the same market that they are trading to and the same product type.
Vertical Merger: Two companies on different levels of the production line merge, so a manufacturer and a retailer may join forces, for example.
Conglomeration: Where two unrelated businesses merge.
Market-extension Merger: Two companies who sell the same good to different markets merge.
Product-extension Merger: Two companies who are in the same area of retail, but with different products, merge.
Sometimes it can be hard to know which of the two to go for. Often companies will be unbalanced in size, so the larger may prefer to acquire, while the other prefers to merge, but this is something that is not always true. Often deals can be made, and a purchase merger can take place, for example. What is a fact is that, when two companies come together in either way, a main competitor on the market is abolished, leaving what should be a profitable company with a larger overall market share, so mergers and acquisitions are a profitable way to expand businesses if carried out correctly.
See how experts in corporate finance can help and assist in mergers and acquisitions.
Article Source: http://EzineArticles.com/?expert=Barry_Trevor
Mergers and acquisitions are common conditions used to make reference to the combination of organizations. A merging results when two organizations come together to form a single organization. When one organization purchases out the managing or significant part of another organization's stock, it is known as as acquisitions. The merger can be horizontal merger, conglomerate merger or vertical merger; it relies on the merging organizations nature. If the two organizations which have made the decision on consolidating contend in same production it is said to be horizontal merging. If two organizations of different product line decided on a consolidating such that there products together increases the company's value is said to be vertical merger. At last, the organizations that do not have similar products at all made the decision to merge; this type of merger is called conglomeration merger. Based on how merger has been funded it can be classified as purchase mergers and consolidation mergers.
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