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What is the difference between Merger and Acquisition?

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Isaac Thuku

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What is the difference between Merger and Acquisition?

Are mergers and acquisitions the same thing? What are the pros and cons of mergers? What are the pros and cons of acquisitions? What are the requirements for a merger or acquisition? Who is in-charge of mergers and acquisitions? How long does a merger / acquisition take.

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Mergers, acquisitions, entrepreneurs, business, types of businesses, Finance

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Isaac Thuku

A merger means combining two companies (legal entities) into one entity.
An acquisition means one company entirely takes over the ownership of another company.

Pros of Mergers and Acquisitions

-Reduced costs of production hence higher profit margins
- Reduced duplication where you have two companies competing for the same market.
- Ability to compete on the International market
- Ability to invest in research and development. This leads to better products and improved operation efficiency

Cons of Mergers and acquisitions

- Higher prices fro products and services since there is reduced competition in the market
- Reduced products to choose from for the customer
- The merged entity may be too big and expensive to operate
- Loss of employment