The Difference Between a Merger and an Acquisition

The word ‘merger’ means two organizations coming together as one. An acquisition means to takeover something or procure it. In business circles, mergers and acquisitions are often known as M & A. Both terms are used loosely to mean the same thing. But they are different in meaning.

An acquisition is the purchase of an organization by another. It could be a friendly takeover or things could go awry and it could be a hostile one. In an open acquisition, company execs negotiate in an amiable atmosphere. If it is an aggressive acquisition, the bidder would usually try to acquire the company when the owners are unwilling to sell or agree without a fight. This is usually the scenario with a large establishment trying to swallow up a little one using legal loopholes.

A merger occurs between two organizations that have reached a mutual decision to come together as one. And since these organizations have merged as one, new stocks are issued and old ones are yielded. The merger can be a horizontal merger, conglomerate merger or a vertical one. If the merging companies are both in the same product line, it is known as horizontal merging. If the two companies are in different product lines, it is a vertical one... read more

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