What is the difference between merger and acquisition?

Both terms often refer to the joining of two companies, but there are key differences involved in when to use them. A merger occurs when two separate entities combine forces to create a new, joint organization. Meanwhile, an acquisition refers to the takeover of one entity by another.

Is a merger a takeover?

Since mergers are so uncommon and takeovers are viewed in a negative light, the two terms have become increasingly blended and used in conjunction with one another. Contemporary corporate restructurings are usually referred to as merger and acquisition (M&A) transactions rather than simply a merger or acquisition.

What is a merger and acquisition (M&A) deal?

Contemporary corporate restructurings are usually referred to as merger and acquisition (M&A) transactions rather than simply a merger or acquisition. The practical differences between the two terms are slowly being eroded by the new definition of M&A deals.

How do mergers and acquisitions affect investment banking?

In the investment banking industry, news of mergers and acquisitions can cause sudden spikes or dips in the value of a company's stocks. Companies merge and acquire others to consolidate their assets and increase market share. Mergers occur when two entities come together to form a single company.