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Chapter 11: Q. 11 (page 272)

What is a corporate merger? What is an acquisition?

Short Answer

Expert verified

Mergers and acquisitions are ways of concentrating power, i.e. create more value than on an individual basis.

Step by step solution

01

Step1. Introduction

Mergers and acquisitions are ways of concentrating power, i.e. create more value than on an individual basis. They are done for various reasons, like power concentration, diversification, etc.

02

Step2. Mergers

Combination of two or more companies into one, either by closing down old entities into a new entity, or by merging into one existing entity is called a merger.

03

Step3. Acquisition 

When one company (generally larger company), takes over/ acquires another company to gain control by buying all or most of the shares is called acquisition.

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