Mergers & Acquisitions For Dummies, 2nd Edition

Chapter 1

Explaining Mergers and Acquisitions

IN THIS CHAPTER

Familiarizing yourself with the main vocabulary of mergers and acquisitions

Following the rules of the road

Opening your eyes to potential costs

Determining the type of company you have

Mergers and acquisitions is a complicated field, so this chapter provides an overview: an introduction to the basic terms and phrases, a discussion of decorum and the basic M&A process, a look at the players and the category of deals, and my handy-dandy guide to helping you, the business owner, determine what kind of business you have.

Defining the Term

Mergers and acquisitions (or M&A, for short — the M&A world is rife with acronyms and initialisms) is a bit of a catchall phrase. For all intents and purposes, M&A simply means the buying and selling of companies. When you think about it, mergers and acquisitions aren’t different; they’re simply variations on the same theme.

In the simplest sense, a merger is a combination of two or more entities where each merging entity has an equal stake in the new enterprise and each merging entity ...