Mergers and Acquisitions (M&A)
The term mergers and acquisitions (M&A) refers to the consolidation of companies or their major
business assets through financial transactions between companies. A company may purchase and absorb
another company outright, merge with it to create a new company, acquire some or all of its major assets,
make a tender offer for its stock, or stage a hostile takeover. All are M&A activities.
The term M&A also is used to describe the divisions of financial institutions that deal in such activity.
The terms “mergers” and “acquisitions” are often used interchangeably, but they differ in meaning.
In an acquisition, one company purchases another outright.
A merger is the combination of two firms, which subsequently form a new legal entity under the banner
of one corporate name.
A company can be objectively valued by studying comparable companies in an industry and using metrics.