How do mergers and acquisitions work?

Mergers and acquisitions are two main forms of corporate restructuring. When companies merge, they become one business entity, while an acquisition occurs when one company purchases another. In a merger, typically two companies of similar size and stature will come together to form a larger entity. Merging companies will often have complementary products and services, creating opportunities for greater potential profits. Mergers could also result in cost savings, since the two companies will be able to share resources, such as personnel and equipment. In an acquisition, one company will purchase either the assets or the share capital of another company. This type of transaction is usually done to gain access to a specific asset or set of assets. The acquiring company may also be looking to expand its products and services or increase its market share. In most cases, the acquiring company will gain control of the purchased company and integrate its operations into its own. Both mergers and acquisitions can be structured as friendly transactions, in which both parties agree to the terms of the deal, or as hostile transactions, in which the target company resists the takeover attempt. Whether friendly or hostile, both forms of corporate restructuring require the approval of company stakeholders, such as shareholders or creditors. Additionally, North Carolina state law requires the approval of the state Attorney General for certain merger and acquisition transactions.

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