The terms ‘merger’ and ‘acquisition’ are often used interchangeably, but the truth is that there are some key distinctions that separate the two activities. Yes –ultimately they both refer to a business changing ownership, and the catch-all term ‘mergers and acquisitions’ is used to describe this kind of transactional corporate restructuring, but the specific details of the change are what is important here.
Here is our guide to the difference between a merger and an acquisition.
In legal terms, a merger is a consolidation of businesses. After the completion of a merger, a new entity is created, which can often incorporate leadership elements from both former companies –so the new organization might see the CEO of one company retain that position while the CEO of the other takes a role as CFO, for example.