Mergers And Acquisitions

Mergers and acquisitions, also known by its abbreviation as "M&A," regards the merging or combining of two corporate entities to become one company. This type of growth management entails the merging of business concerns with complementary operations to augment their respective efficiencies and perhaps achieve economies of scale and capture market share.

In a straight acquisition, one company buys another company in an outright fashion. The Exchange may be cash, stock, or a combination of both. The acquisition may involve a friendly approach, such as when the two companies cooperate on the terms of the merger, or it could also take the form of a hostile merger or takeover. The hostile takeover happens when the suitor corporation acquires enough shares to assume control. In the later scenario the target may not be aware of the offer and may be unwilling to sell.

Although an acquisition is normally the purchase of a smaller firm by a bigger one, it can also take the form of a reverse merger, also known as a reverse takeover. In a reverse takeover a smaller company purchases most of the outstanding shares of a larger company and thereby gains control, may change the name of the combined entity and institute many other corporate and management changes.

Another M&A variant is the reverse merger. In a reverse merger a private company purchases most of the shares of a public company - some times referred to as a "shell company" - and the merged entity may start trading in a very short order. Of course, the shell corporation is called that because typically is has no assets, the only thing that's left is its corporate structure and its ability to trade.

The process of mergers and acquisitions is a very elaborate endeavor requiring a high level of expertise. This area of corporate finance and management should be approached with the surefooted guidance of a very experienced securities attorney.