Understanding the Terminology

For the purposes of this chapter, the terms merger and acquisition are used as interchangeable concepts to describe a variety of combinations that, regardless of the specific method, all require some form of merging of firms' assets and personnel. There are, however, differences in the ways firms can combine (Ozanich & Wirth, 1993):

  • Acquisition is the direct purchase of assets of another company using cash, stock, or a note providing for payment at a specified rate and time. Usually the acquired firm continues to exist, but under new ownership.
  • Merger refers to the combination of two corporations' assets into a single existing entity, and the acquired company ceases to exist. It typically takes on the name and identity ...

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