Mergers and Acquisitions: Where and How Do They Differ?

Mergers and AcquisitionsThe terms “mergers” and “acquisitions” are mostly business-related terms. It’s not vital knowledge, considering the more important things in the world. But, to enterprises that will soon deal with such process, knowing which is which will determine if the deal is good or bad.

Many people assume they’re the same thing. Their unawareness ruins it sometimes, as some people spread inaccurate definitions about mergers and acquisitions. It’s best to listen to experts, and pay no heed to amateur opinions. These two words deal with big money, which should be enough to convince most people to listen to certified sources.
Here are short descriptions and details of these business processes:

Mergers

A company merger is the combining of two companies or more. This is less unsavory than an acquisition, because the companies involved are equals during the process. Mergers often form into a completely new company that may be either “horizontal” or “vertical”. The consolidation of game companies Squaresoft and Enix is a good example of horizontal mergers, Disney-Pixar deal is a good vertical merger tale.

Acquisitions

Due to its nature, acquisiions are often in comparison to the term “hostile takeover.” It’s when a larger business “consumes” a smaller business. Like mergers, there are different types of acquisitions: single and affiliation. Single-business acquisitions are about bigger companies taking what they need from the smaller players, such as equipment, people, or their customers. On the other hand, affiliation makes smaller companies perform a task solely for labor concerns from the bigger business, such as marketing.

It’s important for small businesses to get legal representation when merging or acquired by bigger companies. At the very least, lawyers can make the deal as straight as possible. In addition, it’s good to check their background and past cases to see their expertise in handling such a case. The choice of lawyer won’t mean much in the big picture, but they do make the transaction safe and by the rules.

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