Some public companies rely on acquisitions as an important value creation strategy. Acquisitions are divided into 'private' and 'public' acquisitions, depending on whether the acquiree or merging company (also termed a target) is or is not listed on a public stock market. Such purchase may be of 100%, or nearly 100%, of the assets or ownership equity of the acquired entity.Ī consolidation/amalgamation occurs when two companies combine to form a new enterprise altogether, and neither of the previous companies remains independently owned. Specific acquisition targets can be identified through myriad avenues, including market research, trade expos, sent up from internal business units, or supply chain analysis. Department of Justice's Antitrust Division for all mergers or acquisitions over a certain size.Īn acquisition/takeover is the purchase of one business or company by another company or other business entity.

In the United States, for example, the Clayton Act outlaws any merger or acquisition that may 'substantially lessen competition' or 'tend to create a monopoly', and the Hart–Scott–Rodino Act requires companies to get 'pre-clearance' from either the Federal Trade Commission or the U.S. In most countries, mergers and acquisitions must comply with antitrust or competition law. From a legal and financial point of view, both mergers and acquisitions generally result in the consolidation of assets and liabilities under one entity, and the distinction between the two is not always clear. A deal may be euphemistically called a ' merger of equals' if both CEOs agree that joining together is in the best interest of both of their companies. Technically, a merger is the legal consolidation of two business entities into one, whereas an acquisition occurs when one entity takes ownership of another entity's share capital, equity interests or assets. As an aspect of strategic management, M&A can allow enterprises to grow or downsize, and change the nature of their business or competitive position. Mergers and acquisitions ( M&A) are business transactions in which the ownership of companies, business organizations, or their operating units are transferred to or consolidated with another company or business organization.

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