This article answers common questions asked by people about mergers & acquisitions.

What is a merger?

A merger is the combination of two companies into a single entity, with one company surviving and the other company being absorbed into it.

What is an acquisition?

An acquisition is the purchase of one company by another company, in which the acquiring company obtains control of the target company.

What is the difference between a merger and an acquisition?

The main difference between a merger and an acquisition is that in a merger, both companies combine to form a new entity, while in an acquisition, one company is absorbed into another company.

How does a merger or acquisition affect employees?

The impact of a merger or acquisition on employees can vary. In some cases, employees may be offered positions at the acquiring company, while in other cases, employees may be laid off as part of the merger or acquisition process.

How does a merger or acquisition affect customers?

The impact of a merger or acquisition on customers can also vary. In some cases, the combining companies may offer new or improved products or services as a result of the merger or acquisition. In other cases, customers may experience changes in the quality or availability of products or services.

How does a merger or acquisition affect shareholders?

The impact of a merger or acquisition on shareholders depends on the terms of the deal and the relative value of the two companies’ stocks. Shareholders of the acquiring company may see an increase in the value of their stock if the merger or acquisition is successful, while shareholders of the target company may see a decrease in the value of their stock.

What is a friendly merger or acquisition?

A friendly merger or acquisition is one in which the management and board of directors of the target company support the transaction and agree to the terms of the deal. A hostile merger or acquisition is one in which the management and board of directors of the target company do not support the transaction and do not agree to the terms of the deal.

What is a hostile merger or acquisition?

A hostile merger or acquisition is one in which the management and board of directors of the target company do not support the transaction and do not agree to the terms of the deal. The acquiring company may attempt to bypass the management and board of directors and directly appeal to the target company’s shareholders to vote in favor of the deal.

How is the price of a company determined in a merger or acquisition?

The price of a company in a merger or acquisition is typically based on a variety of factors, including the company’s financial performance, market conditions, and the potential value of the company to the acquiring company.

What is due diligence in a merger or acquisition?

Due diligence is the process of evaluating a company’s financial and operational information before a merger or acquisition. It is typically conducted by the acquiring company to assess the target company’s strengths, weaknesses, and potential risks.

What is a merger or acquisition integration plan?

A merger or acquisition integration plan is a detailed plan for how the two companies will be integrated following the merger or acquisition. It typically includes plans for combining operations, aligning processes and systems, and integrating the two companies’ cultures.

What is a reverse merger?

A reverse merger is a type of merger in which a private company acquires a publicly traded company, with the private company becoming the surviving entity and the publicly traded company being absorbed into it. This allows the private company to become a publicly traded company without going through the initial public offering (IPO) process.

What is a spin-off?

A spin-off is a type of divestiture in which a parent company separates one of its subsidiaries or divisions into a separate, independent company.

What is a divestiture?

A divestiture is the process of selling or disposing of a company’s assets or business units.

What are the benefits of a merger or acquisition for the acquiring company?

The benefits of a merger or acquisition for the acquiring company may include access to new markets, technology, or products, as well as cost savings through economies of scale.

What are the risks of a merger or acquisition for the acquiring company?

The risks of a merger or acquisition for the acquiring company include the potential for integration problems, cultural clashes, and the risk that the acquisition does not deliver the expected value or benefits.

What are the benefits of a merger or acquisition for the target company?

The benefits of a merger or acquisition for the target company may include access to new resources, technology, or markets, as well as the opportunity to join a larger, more financially stable company.

What are the risks of a merger or acquisition for the target company?

The risks of a merger or acquisition for the target company include the potential loss of autonomy, the possibility that the acquiring company may not honor existing contracts or commitments, and the risk that the acquisition does not deliver the expected value or benefits.

What is regulatory approval and how does it affect a merger or acquisition?

Regulatory approval is the process of obtaining permission from regulatory agencies for a merger or acquisition to proceed. This may be required by national or international laws or regulations, and the acquiring company may be required to demonstrate that the merger or acquisition will not harm competition or consumers.

What are some examples of successful and unsuccessful mergers and acquisitions?

Some examples of successful mergers and acquisitions include the merger of Exxon and Mobil to create ExxonMobil, the acquisition of YouTube by Google, and the merger of Marriott and Starwood to create the largest hotel company in the world. Some examples of unsuccessful mergers and acquisitions include the merger of AOL and Time Warner, which was widely seen as a failure, and the acquisition of Lehman Brothers by Barclays, which was plagued by integration problems.