If you want to grow rapidly as a business at home or abroad, you may want to consider merger and/or acquisition. Although these growth strategies are often used interchangeably, there are differences between the two methods. After all, what is the difference between merger and acquisition? Therefore, we list the facts and points of interest for you.
What is a merger?
When we talk about a merger, we are talking about a merger of two businesses into one new business. Both businesses agree that joining forces leads to better results in the future. Often, improving competitiveness is an important reason for merging into one organization.
A merger involves two owners, who often choose to jointly shape and run the new organization. The starting point is often that two businesses/shareholders each own 50 percent of the shares.
And a merger often results in a new identity for the merged businesses. Depending on organizational and fiscal aspects, at least one of the companies to be merged ceases to exist, but sometimes both.
What is an acquisition?
Whereas mergers are about the amalgamation of two nearly identical businesses, takeovers are usually about a larger company buying up a smaller business. Occasionally, a smaller company with sufficient capital acquires a larger business. A takeover usually involves a transfer of 100 percent of the shares. A partial takeover involves a smaller equity stake
Takeovers are differentiated into friendly and hostile takeovers. Friendly takeovers, as the name suggests, take place in good consultation between the two parties. In a hostile takeover, a business makes an offer for another business without any prompting from that business. A hostile takeover often has to do with shareholder dissatisfaction or the course the business is on and somewhat less with rapid growth ambitions of an acquirer.
Points of attention merger and acquisition
Do you have your eye on a business you want to take over or perhaps enter into a merger with? If so, it's important to mirror your corporate culture with that of the business to be bought. Merging or acquiring another business seems like a relatively simple and beneficial exercise on paper, due to tax advantages, improved competitiveness and financial benefits. However, practice is recalcitrant and mergers and acquisitions often fail due to a mismatch of corporate cultures.
