In business, consolidation or amalgamation is the merger and

acquisition of many smaller companies into a few much larger ones. In the

context of financial accounting, consolidation refers to the aggregation
of financial statements of a group company as consolidated financial
statements. The taxation term of consolidation refers to the treatment of
a group of companies and other entities as one entity for tax purposes.
Under the Halsbury's Laws of England, 'amalgamation' is defined as "a
blending together of two or more undertakings into one undertaking, the
shareholders of each blending company, becoming, substantially, the
shareholders of the blended undertakings. There may be amalgamations,
either by transfer of two or more undertakings to a new company, or to the
transfer of one or more companies to an existing company".
Overview
Consolidation is the practice, in business, of legally combining two or more organizations into a
single new one. Upon consolidation, the original organizations cease to exist and are
supplanted by a new entity.[4]

 Access to new technologies/ techniques

 Access to new clients

 Access to new geographies

 Cheaper financing for a bigger company

 Seeking for hidden or nonperforming assets belonging to a target company

(e.g. real estate)

 Bigger companies tend to have superior bargaining power over their

suppliers and clients (e.g. Walmart)
 Synergies

There are three forms of business combinations:

 Statutory Merger: a business combination that results in the liquidation of the

acquired company's assets and the survival of the purchasing company.

 Statutory Consolidation: a business combination that creates a new company

in which none of the previous companies survive.

 Stock Acquisition: a business combination in which the purchasing company

acquires the majority, more than 50%, of the Common stock of the acquired
company and both companies survive.
 Variable interest entity
 Parent-subsidiary relationship: the result of a stock acquisition where the
parent is the acquiring company and the subsidiary is the acquired company.

 Controlling Interest: When the parent company owns a majority of the

common stock.
 Non-Controlling Interest or Minority Interest: the rest of the common stock
that the other shareholders own.
 Wholly owned subsidiary: when the parent owns all the outstanding common
stock of the subsidiary.
 In an amalgamation, the companies which merge into a new or existing
company are referred to as transferor companies
or amalgamating companies. The resultant company is referred to as
the transferee company.