A merger combines two companies into one, typically to reduce competition, increase market share, or leverage complementary strengths. Types include horizontal (same products/services), vertical (along the supply chain), and conglomerate (unrelated industries) mergers, each offering different growth and efficiency opportunities.
On the other hand, an acquisition occurs when one company purchases most or all of another to gain control, typically aiming to access its assets, markets, and customers. Acquisitions can be friendly, with board approval, or hostile, where control is gained without the target company’s consent.
Mergers typically distribute control more equally, aiming for mutual growth, market expansion, and operational synergy. Legally, they create a new entity, often financed through stock swaps, and require blending organizational cultures for a unified identity. Employees usually view mergers more positively due to the collaborative approach.
Acquisitions give the buyer greater control, focusing on market share, technology, or talent, while the acquired company may retain its legal identity. They are usually cash- or asset-based, with the acquiring company’s culture prevailing, often leading to role changes or redundancies. Employee uncertainty is generally higher compared with mergers.
