What is a Merger?

A merger is the combination of two or more entities into a single entity, with the resources of the original entities being pooled into the new entity. The owners of the original entities continue to be the owners of the merged entity. The intent of a merger is that the parties enter into the transaction on approximately equal terms.

Merger vs. Acquisition

A merger is similar to an acquisition, in that both actions result in two businesses joining together. However, a merger implies that both entities will work together, along with both sets of owners, to operate the resulting business, while an acquisition implies that one business takes over the other. Acquisitions are far more common than mergers, since there is nearly always a clear owner emerging from these transactions.