what is difference between merger and acquisition of companies

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asked May 4, 2015 in Mergers and Acquisitions by Sujata
What is the difference between merger and acquisition of companies? Both terms look similar.

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answered May 16, 2015 by Bharat Sinha Experts

1. Merger

Merger is defined as a combination where two or more than two companies combine into one company. In this process one company survives and others lose their corporate existence. The survivor acquires assets as well as liabilities of the merged company or companies.
In another form of merger, one company purchases another company for cash and integrates the purchased company with itself.
Amalgamation is a synonym of merger, especially in Indian law. Merger may take two forms: merger through absorption and merger through consolidation.

2. Acquisition

The term "acquisition" refers to the procurement of assets by one company from another company. In an acquisition, both companies may continue to exist.

An acquisition, also known as a takeover, is the buying of one company (the ‘target’) by another. An acquisition may be friendly or hostile. In the former case, the companies cooperate in negotiations. In the latter case, the takeover target is unwilling to be bought or the target's Board has no prior knowledge of the offer. Acquisition usually refers to a purchase of a smaller firm by a larger one. Sometimes, a smaller firm will acquire management control of a larger or longer established company and keep its name for the combined entity. This is known as a reverse takeover.

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