Learn when to merge and when to acquire for optimal strategic outcomes
Get M&A Valuation QuoteA merger is the combination of two companies of approximately equal size to form a new, single entity. Both companies' stocks are surrendered and new company stock is issued.
An acquisition occurs when one company (acquirer) purchases another company (target) and becomes the new owner. The target company ceases to exist as an independent entity.
| Aspect | Merger | Acquisition |
|---|---|---|
| Company Size | Similar or equal sizes | Buyer typically larger |
| New Entity | Yes, new combined company | No, target absorbed |
| Control | Shared governance | Acquirer controls |
| Stock Exchange | New stock issued | Cash or stock payment |
| Legal Status | Both entities dissolve | Target dissolves |
| Complexity | Higher complexity | Moderate complexity |
When both companies bring similar value and capabilities to the combination.
When both management teams will contribute to the new entity's leadership.
When creating a stronger competitive position through equal combination.
When cultures are compatible and can be successfully blended.
When seeking specific capabilities, technology, or market access.
When the acquirer needs to maintain operational and strategic control.
When there's significant difference in company sizes or market positions.
When rapid integration into existing operations is desired.
Exchange ratios based on relative values of both companies
Purchase price based on target company valuation and premium
Shareholders receive stock in new entity based on exchange ratio
Target shareholders receive cash and/or acquirer stock
Pooling of interests or purchase method depending on structure
Purchase method with potential goodwill recognition
Two oil giants merged to create the world's largest publicly traded oil company.
Deal Value: $81 billion
Media conglomerate merger that combined internet and traditional media.
Deal Value: $164 billion
Facebook acquired WhatsApp to expand messaging capabilities and user base.
Deal Value: $19 billion
Microsoft acquired LinkedIn to strengthen professional networking and productivity.
Deal Value: $26.2 billion
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