How do mergers differ from acquisitions?

Mergers and acquisitions are two distinct strategies used by companies to grow and expand their operations, but they differ in their structure and implications. A merger occurs when two companies of similar size and strength come together to form a new entity, often with a shared vision and equal partnership. In contrast, an acquisition involves one company purchasing another, where the acquired company typically loses its identity and operates under the umbrella of the acquiring firm. To summarize, while both mergers and acquisitions aim to enhance business capabilities, they are fundamentally different in their execution and outcomes. Mergers create a new organization through collaboration, whereas acquisitions result in one company absorbing another. Understanding these differences is crucial for stakeholders involved in corporate strategy and decision-making.