What is the Difference

between a Merger
and an Acquisition
 What is the Difference between a Merger and an
Acquisition

• Mergers and
Acquisitions are actually
two different types of
deals
 What is the Difference between a Merger and an
Acquisition
• A Merger is when two
companies, often of
comparable size, combine
to form a new joint
business
• In theory both are equal
partners
• Sometimes called a
Merger of Equals
 What is the Difference between a Merger and an
Acquisition

• The Directors of the two

Companies approve the
combination of the
businesses and obtain
shareholders permission
to consummate the deal
 What is the Difference between a Merger and an
Acquisition

• Following the close of

the deal, in a merger
both businesses are
combined into a new
corporate entity
• Example: Chrysler and
Daimler Benz
 What is the Difference between a Merger and an
Acquisition

• Very often, a deal is

referred to as a merger
rather than an
acquisition when intact it
is the latter and not the
former
 What is the Difference between a Merger and an
Acquisition
• Acquisition is when one
company buys another
• Usually a large company
buys a smaller one
• A new company does not
emerge - the target is
subsumed by the buyer
• Sometimes called a
Takeover
 What is the Difference between a Merger and an
Acquisition
• The acquiring company
obtains a majority stake -
often 100% - in the target
firm
• The target company does
not change its name or
corporate structure but
becomes a wholly owned
subsidiary of the buyer
 What is the Difference between a Merger and an
Acquisition

• An acquisition can be
paid for in cash or stock
or a combination of
both.
What is the Difference
between a Merger
and an Acquisition