About Merger And Amalgamation
MERGER
Most companies are restructured through mergers and acquisitions. Although these terms are often used together or interchangeably, they are actually not the same thing. Mergers and acquisitions both expand the business externally. For example, when a business buys an existing business and instantly grows in size, increases its production levels, and has better chances for growth.
A merger occurs when two or more companies combine and create a new company. The companies in a merger typically are in the same industry or do similar things and want to either grow or diversify their offerings.
The process of creating a merger can be long and complicated. In many cases, it involves creating a shell partnership subsidiary that the surviving company uses to access its new assets. The surviving company can also buy the assets of the target company instead of purchasing its stock. The target company then settles its debts, pays shareholders, and slows down its operations.
If a large company merges with a smaller company and maintains its leadership and offices, most people say that that company has obtained the other company. When two fairly equal companies merge with each other, it is considered an alliance.
AMALGAMATION
An amalgamation occurs when one company takes over multiple companies. The combined corporations are then automatically liquidated. Amalgamations typically happen when larger companies take over smaller, less financially stable companies.
