A Business-First Approach To The Practice Of Law

How are mergers and acquisitions different?

On Behalf of | Oct 17, 2022 | Business Law |

The ideas of a merger or acquisition of a business may seem similar, but they are actually quite different. While both end in a business becoming part of another business, it is the details that are contrasting.

The Small Business Association explains the way the processes end is the biggest difference. A merger results in a new company, whereas an acquisition does not.

Mergers

A merger involves your business becoming part of another business. Your business essentially ceases to exist once the merger is complete. Everything between the two businesses involved in the merger will become one at the end of the process. The idea is an equal combination of the two businesses that results in a new company.

Acquisitions

An acquisition is when one company takes over another. Your business would become combined with the other business. It loses its identity because it becomes the other company. The other company continues on with your business ending at the time of the acquisition. The idea is to make the other business stronger and better by getting your business’s assets.

Because mergers and acquisitions are so different in the end result, it is essential to make sure you choose the right process in your situation. Keep in mind that with either option, you may lose control and be unable to continue running or working within your company. You may have a better chance of staying on with a merger, but you need to think of either situation as an end for your business because once everything is complete, your business will no longer exist in the way it did before.

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