Selling a privately held company is a huge challenge for most business owners. Since we provide seminars designed to provide business owners with as much information about the M&A process as possible, we also decided to create a corporate blog to provide you with insider tips and information regarding mergers and acquisitions.
Before we get started, we wish to inform you, dear site guests, that information shared herein should not be used in any legal manner. Our purpose is to share what we know, based from our own experiences in negotiating M&A deals for our clients. Each company’s needs and requirements are different. You should seek the assistance of a professional M&A advisor to help you with the process.
Mergers and acquisitions, what’s the difference?
In a nutshell, a merger occurs when two entities, usually of equal size, agree to combine their companies to create a new one—a single unit operating under the combined, new management. In general, both entities will no longer exist when a merger takes place. So for example, if company A merges with company B, the new company will be known as AB. Companies A and B will no longer be recognized as separate entities. Stocks of both companies are also surrendered to the newly merged company, and from these, new shares are created.
When an entity is acquired by another, the acquired company will cease to exist. But the company that takes over will still remain as such. In other words, an acquisition is generally associated with a takeover where one entity acquires ownership of another and operates it as its own. So if company B buys company A through an acquisition, company A will no longer exist, whereas company B will still remain operational.
Depending on what is agreed upon by both entities, the terms covering a merger or an acquisition will vary from deal to deal. With that said, it is always advisable to work with a professional company whose expertise is in mergers and acquisitions.
We will be posting more articles on this page in the coming days. If there is something you wish to be discussed here, or you require more information about M&A, please feel free to get in touch with us. We will be posting our contact details on this page as soon as they become available.