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A merger is a corporate strategy where two existing companies combine to form a single, new legal entity. Unlike an acquisition—where one company takes over another—a merger is typically a partnership of equals designed to expand market reach, reduce costs, and strengthen competitive advantage.
An acquisition occurs when one company (the acquirer) buys most or all of another company's (the target) shares or assets to gain control. Unlike a merger, where two companies join as equals, an acquisition usually involves a larger company "absorbing" a smaller one.
1. Friendly Acquisition: Both companies mutually agree to the transaction.
2. Hostile Acquisition: The acquiring company takes control without the target management’s approval.
3. Asset Acquisition: Purchase of specific assets instead of acquiring the entire company.
4. Management Acquisition: When the existing management team acquires a controlling stake in the company.