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• Basics of Mergers and Acquisitions. May 31,2024 by Lawtract Editor

  

  In this article ” Basics of Mergers and Acquisitions ” ,we are going to understand the basic concepts of the process of Mergers and Acquisitions.

  What is Mergers and Acquisitions?

  In simple terms, Mergers and Acquisitions (M&A) is the buying/selling of a business.

  In technical terms, Merger is the joining of two businesses to form a new single business.

  Acquisition is the buying of one company by another company. No new entity(company) is formed in Acquisition, and the acquired company works under the acquiring company name.

  Why businesses undergo Mergers and Acquisitions?

  Buyer’s Reasons:
  • To enter into a new market.
  • Tax Benefits
  • Higher Growth etc.

  Seller’s Reasons:
  • Maybe the business is underperforming.
  • Start a new business with the money obtained by selling .
  • Early retirement with the money obtained etc.

  What are the different types of a Acquisitions?

  • Asset Purchase: Only the assets of the company are bought, like electronics etc.
  • Stock Purchase: The stock is purchased by the buyer which means the buyer fills the shoes of the seller.
  • Merger: Merger is usually done for tax benefits.

  This article will server as a basic conceptual article for Mergers and Acquisitions.

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