Merger Definition and Difference Between Merger and Acquisition Essay Example

A merger involves the combination of two companies to form a single entity, much like an acquisition or takeover. However, unlike in an acquisition where one company purchases a majority of another company's stock resulting in uneven ownership distribution, both companies' shareholders maintain joint ownership in the newly formed corporation after a merger. As such, a merger results in the formation of a new business through the joining of two pre-existing entities.

Combining two independent companies results in the formation of a new entity that shares ownership and identity. This involves surrendering both companies' stocks and issuing new ones under the newly-formed entity's name. Mergers typically involve similarly sized companies, known as "mergers of equals," while acquisition