23.1.1 Classification by Corporate Structure

If one classifies corporate combination by corporate structure, there are broadly three types of combination. The first type is known as merger where a firm acquires or purchases another firm. The acquiring firm continues to survive but the acquired firm loses its existence. To make it clear through an example, if Firm A acquires Firm B, the combined firm will be known as Firm A, Firm B has therefore ceased to exist.

In the second type of combination, known as consolidation or amalgamation, all the combining firms lose their identity and a new firm comes into being. For example, if Firm A and Firm B combine to form a new firm, Firm C, this is an amalgamation.

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