What Is Mergers And Acquisitions (M&A)?

The article titled "What is Mergers and Acquisitions (M&A)?" was published by MGC Legal.

What is M&A?

A merger occurs when two or more firms combine to form one new company. A merger requires two companies to consolidate into a new entity with a new ownership and management structure (ostensibly with members of each firm). Mergers require no cash to complete but dilute each company's individual power. In an acquisition, a corporation or investor group finds a target company and negotiates with its Board of Directors (BoD) to purchase it.

When one company takes over another and establishes itself as the new owner, the purchase is called an acquisition. In an acquisition, a new company does not emerge. Instead, the smaller company is often consumed and ceases to exist, with its assets becoming part of the larger company.