What are the differences between a merger and an acquisition?

Mergers and acquisitions (M&A) involve the combination of two or more companies. Mergers and acquisitions both involve the combination of two companies, but there are differences between the two. A merger is a combination of two or more companies in which one company absorbs the other company. This means that the company that is absorbed ceases to exist and its assets and liabilities become property of the company that absorbed it. The newly created company will assume all of the assets, liabilities, and obligations of the absorbed company and continue to operate under the same name. An acquisition is when one company purchases another company. The company being purchased is generally referred to as the “target” and the purchasing company is the “acquirer”. In an acquisition, the target company does not cease to exist and the acquiring company will assume all of the assets, liabilities, and operations of the target company, but the target company will no longer be an independent entity and will become a subsidiary of the acquiring company. In Tennessee, mergers and acquisitions are regulated by the Tennessee Business Corporation Act and the Tennessee Securities Act. Additionally, the federal antitrust agencies may review mergers or acquisitions that involve U.S. interstate commerce to ensure that they comply with federal laws and regulations. Overall, the main difference between a merger and an acquisition is that in a merger, the company being acquired is absorbed and ceases to exist, while in an acquisition the target company does not cease to exist and becomes a subsidiary of the acquiring company.

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