Differences between mergers and acquisitions
Mergers & acquisitions are complicated processes that require a great deal of due diligence, knowledge, business acumen as well a financial savvy. Commerce Business Advisors deal with merger and acquisitions on a regular basis and they can help you in Austin TX and San Antonio TX.
The word merge means to combine. So in a business sense this will involve combining 2 or more businesses into a new one. In most cases a merger will be the amalgamation of 2 separate entities into a new entity. This process could result in the formation of a new company or legal entity. A merger or fusions between tow companies is as a result of mutual agreement and cooperation. The benefits of mergers often relate to costs, competition and operational efficiency.
An acquisition is when one company takes over another company. The target company is then part or under the control of the new company. This could happen in 2 ways. One way is where the acquiring company simply buys the assets of the target company and basically absorb those assets including selected staff members into its business. Another way this could happen is where the acquiring company obtains a majority interest in the target company by buying 51% or more of the target’s share capital. The target company could remain within its legal shell but now has a new owner. Acquisitions could be friendly or hostile or they could simply be in the form of a buyout. Then main benefits of acquisition relate to growth, market share, innovative products and future returns.
Mergers mostly happens between companies of a similar size. In the case of an acquisition, the acquiring company is likely to be bigger and stronger than the target company. In either case there are many factors involved. Apart from finding the right company to merge with or to acquire, there are many complicated steps in the process. Commerce Business Advisors can help with both.