Mergers & Acquisitions

Mergers and acquisitions are arguably the bedrock of corporate transactions and movements in the business world. (M&A) are transactions in which the ownership of companies, other business organizations, or their operating units are transferred or consolidated with other entities. As an aspect of strategic management, M&A can allow enterprises to grow or downsize, and change the nature of their business or competitive position,

Mergers

Two companies can initiate a merger by having the board of directors approve and seek shareholders' approval for the combination of the two separate companies into one company.

In general, both companies are typically of comparable size, and the two merge into one company, often creating an entirely new company.

Acquisitions

An acquisition occurs when one company "targets" another company, generally called the target company, and typically obtains a controlling interest in that company. The target company usually ceases to exist once it has been acquired, and there are several ways which a target company can be acquired - both through hostile and friendly takeovers.

Management Acquisition

A management acquisition, also called a management-led buyout (MBO), is an acquisition that occurs when the executives of one company buy a controlling interest in another company and take it private. The executives in MBOs typically get backed by financial institutions and often leverage the acquisition with a lot of debt - plus, a majority of shareholders must approve the acquisition.