edf40wrjww2CF_PaperMaster:Desc
Mergers And Acquisitions: Introduction
A general term used to refer to the consolidation of companies. A merger is a combination of two companies to form a new company, while an acquisition is the purchase of one company by another in which no new company is formed.
Mergers and acquisitions (M&A) and corporate restructuring are a big part of the corporate finance world. Every day, investment bankers arrange M&A transactions, which bring separate companies together to form larger ones. When they're not creating big companies from smaller ones, corporate finance deals do the reverse and break up companies through spinoffs, carve-outs or tracking stocks.
Deals can be worth hundreds of millions, or even billions, of dollars. They can dictate the fortunes of the companies involved for years to come. For a CEO, leading an M&A can represent the highlight of a whole career. And it is no wonder we hear about so many of these transactions; they happen all the time. Next time you flip open the newspaper’s business section, odds are good that at least one headline will announce some kind of M&A transaction.
Merger
Definition:
When one company purchases another company of an approximately similar size. The two companies come together to become one generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock in previous company. No new entity is created from a merger.
Two companies usually agree to merge when they feel that they can do something together that they can't do on their own.
For example, AOL and Time Warner merged a few years back in hopes that they could both gain ...