What are the differences between a merger and an acquisition?

A merger and acquisition, or an "M&A," are terms used to describe the process of combining two or more companies, generally through the purchase of the assets and liabilities of one company, or a majority stake in another company, by a larger company. The primary difference between a merger and an acquisition is that in a merger, two or more companies become a single entity and the two companies are said to be blending or combining their resources into a single entity. In an acquisition, one company, referred to as the acquirer, purchases or gains control of another company, referred to as the target. In a merger, both companies agree to the liquidity and ownership structure of the new organization. In an acquisition, the acquiring company has the majority of control in determining the terms and the legal structure of the new organization. In addition, whereas in a merger, there may or may not be an exchange of finances or assets, in an acquisition there is almost always an exchange of finances or assets that are transferred from the target company to the acquirer. The acquirer is also expected to pay a premium to attract the target company. Mergers and acquisitions in the state of Washington are subject to the regulations of the Washington State Department of Financial Institutions. This department ensures that both buyers and sellers are well informed of their respective rights and obligations in any type of merger or acquisition deal.

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What are the differences between a merger and an acquisition?

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