What is the difference between a merger and an acquisition?

Mergers and acquisitions are often talked about together as if they are close to being the same thing, but the truth is that these are very different actions that corporations and small businesses can take. They do share some qualities — such as changes to the ownership structure — but there are also key differences.

How do you know which is which? One way is to look at the restructuring that does nor does not happen after the transaction is made.

Little change at the top vs. significant change

For instance, say that Company A sees little change at the top. The business runs the same way and the same individuals are in charge. This is probably an acquisition. Company B bought Company A for some reason, such as getting access to its intellectual property, but no one at Company B really wants to run Company A. They approve of how it was being run and just want to benefit from it by owning it as a parent company.

On the other hand, imagine that Company A is purchased and then sees significant change. Old executives leave. New executives take over. Some are brought in from the outside and some are transferred over. This is likely a merger. Company B is combining itself and Company A at a fundamental level and taking that company over. This is much different than simply owning it. They’re making massive changes to how it functions.

Navigating mergers and acquisitions

Both tactics can work to make a business better, depending on the situation. The key is simply to know how both mergers and acquisitions work, how they differ, and how to navigate that situation as you move forward with your goals. An experienced attorney can help you navigate these unfamiliar situations with greater clarity and ease.