The best way to define a business merger is to compare it to other business terms that are frequently confused with the concept of a merger:
Mergers are often actually acquisitions. One business will usually purchase the other business, and then the two businesses will combine to form a new company.
For a small business trying to grow, merging with another company may be a more lucrative option than making an initial public offering (IPO), especially in an erratic market. A small business may instead put itself up for sale because being acquired could potentially be an economically safer long-term growth strategy.
For a business trying to enter into a new market, acquiring another business to merge with in that market can be a cheap alternative to a costly solo change in business strategy. Many businesses that are substantial in size choose to strengthen themselves by diversifying their product line, and acquiring and merging with other businesses is often the best way to do that.
There are many complexities and legal formalities to conducting mergers and acquisitions between businesses. If you own a business and are considering merging with another business, you will most likely want to consult a business attorney who has experience in acquisitions and mergers. Your attorney will let you know what kind of rules and regulations you must follow in the process, and make sure your interests are represented in any written contracts and other legal forms.
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Last Modified: 06-03-2014 10:12 AM PDTLaw Library Disclaimer
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