Jefferson, Colorado, business owners, stock holders and other people involved in various industries understand that running a business can be very challenging. It is not enough that your company continues to operate on a daily basis. The real challenge is how you make your business flourish. Those businesses that are not able to stand up to the competition will be easily swallowed by bigger companies or corporations.
Mergers and acquisitions are common business terms, and if you are a business owner, a shareholder or someone who intends to start a business, it is important for you to fully understand the difference between mergers and acquisitions. As the saying goes, there is strength in numbers. The basic principle of mergers and acquisitions is that a company can become more profitable by taking over or combining stocks with another company. The goal in a merger or an acquisition is to become a more competitive and cost-efficient company.
If both companies have the same goals and the owners of those companies have decided that they can become a more successful company if they work together, that is considered a merger. In mergers, both companies' stock will be surrendered and a new company stock is formed. When it comes to acquisitions, one company takes over the other company.
If you are planning to merge or acquire a new company, you have to consider several options, such as whether your company will benefit from such an action plan. You may also wish to consider speaking with a business law attorney because an acquisition is often hostile compared with a merger. The legal professional will be able to offer you a walk-through and discuss various scenarios that will be able to help you decide whether to move ahead with your plans.
Source: Investopedia.com, "Mergers and acquisitions: definition," Ben McClure, accessed on Sep. 25, 2014