Mergers and Acquisitions

Mergers & acquisitions represent the act of combining two companies through stock or assets purchasing in an effort to increase the present capabilities of a company by achieving higher revenues, gaining market share, diversifying product and/or service offering, gaining tax benefits and benefitting from economies of scales.

There are many similarities between the two, but mergers differ from acquisitions in that they result in the formation of a new legal entity – a new company. In an acquisition the acquiring company absorbs the target company being acquired.

There are several types of M&A deals. Wolters Kluwer classifies deals based on 3 main criteria and offers the following breakdown:

• based on relationship between buyer and seller – horizontal, vertical, conglomerate, congeneric;
• based on method of acquisition – statutory transactions that include mergers, triangular mergers, consolidation, share and interest exchange;
• based on method of acquisition – non-statutory transactions that include share and interest acquisition, asset acquisition, hybrid two-step acquisition

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Based on how the deal was approached, these transactions can be friendly or hostile.