Merger

AAA

DEFINITION of 'Merger'

The combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock.

INVESTOPEDIA EXPLAINS 'Merger'

Basically, when two companies become one. This decision is usually mutual between both firms.

VIDEO

Loading the player...
RELATED TERMS
  1. Acquisition

    A corporate action in which a company buys most, if not all, ...
  2. Megamerger

    The joining of two large corporations, typically involving billions ...
  3. Consolidate

    The combining of assets, liabilities and other financial items ...
  4. Sweetheart Deal

    A merger, a sale or an agreement in which one party in the deal ...
  5. Forward Triangular Merger

    The acquisition of a target company by a subsidiary of the purchasing ...
  6. Target Firm

    A company which is the subject of a merger or acquisition attempt. ...
RELATED FAQS
  1. How does the level of mergers and takeovers in the Internet sector compare to the ...

    The level of mergers and takeovers in the Internet sector is higher than in the broader market. The Internet sector contains ... Read Full Answer >>
  2. What is the difference between a money market fund and a savings account?

    The primary advantages of the Herfindahl-Hirschman Index (HHI) are the simplicity of the calculation necessary to determine ... Read Full Answer >>
  3. What's the difference between a merger and a hostile takeover?

    The difference between a merger and a hostile takeover has to do with the manner in which two companies merge to become a ... Read Full Answer >>
  4. What's the difference between a merger and an acquisition?

    Mergers and acquisitions are two of the most misunderstood words in the business world. Both terms are used in reference ... Read Full Answer >>
  5. How does a merger affect the customer?

    A merger can affect the customers of the involved business entities on several levels, including price of the product or ... Read Full Answer >>
  6. How does a merger affect the shareholders?

    A merger affects the shareholders of both companies in different ways and is influenced by several factors, including the ... Read Full Answer >>
  7. Why would a company do a reverse merger instead of an IPO?

    Reverse mergers are often the most expedient and cost-efficient way for private companies that hold shares that are not available ... Read Full Answer >>
  8. What business processes were used to establish the Chevrolet motor company?

    William Durant, the founder of General Motors, lost control of his company due to his aggressive expansion plans. Going wholeheartedly ... Read Full Answer >>
  9. What is a stock-for-stock merger and how does this corporate action affect existing ...

    First, let's be clear about what we mean by a stock-for-stock merger. When a merger or acquisition is conducted, there are ... Read Full Answer >>
  10. What is the difference between a merger and a takeover?

    In a general sense, mergers and takeovers (or acquisitions) are very similar corporate actions - they combine two previously ... Read Full Answer >>
  11. In M&A how does an all-stock or all-cash deal affect the equity of the buying company?

    Mergers and acquisitions (M&A) are forms of corporate restructuring that are becoming increasingly popular in the modern ... Read Full Answer >>
  12. Why do companies merge with or acquire other companies?

    Some of the reasons for mergers and acquisitions (M&A) include: 1. Synergy: The most used word in M&A is synergy, ... Read Full Answer >>
Related Articles
  1. Investing

    What's a Merger?

    Mergers are not the same as acquisitions. In an acquisition, one company buys and subsumes another company, leaving only the buyer in place. In most mergers, both companies merge to form an entirely ...
  2. Fundamental Analysis

    Mergers And Acquisitions: Understanding Takeovers

    In the dramatic world of M&As, battleground terms meld with bizarre metaphors to form the language of the game.
  3. Bonds & Fixed Income

    Cashing In On Corporate Restructuring

    Companies use M&As and spinoffs to boost profits - learn how you can do the same.
  4. Professionals

    Wanna Be A Bigwig? Try Investment Banking

    A career in this high-stress field can be very rewarding for the right person. Find out if you have what it takes.
  5. Investing Basics

    The Merger - What To Do When Companies Converge

    Learn how to invest in companies before, during and after they join together.
  6. Forex Education

    Mergers & Acquisitions: An Avenue For Profitable Trades

    When major corporate transactions have a big impact on the currency markets, you can benefit.
  7. Options & Futures

    Corporate Kleptocracy At RJR Nabisco

    The excess of the '80s brought about reckless spending and indulgent management. This is a story of both.
  8. Budgeting

    Consulting - Everybody's Doing It, Should You?

    Fancy yourself a problem solver? Management consulting might be right for you.
  9. Professionals

    Acquire A Career In Mergers

    This exciting sector demands a lot from its advisors. Are you up for it?
  10. Active Trading Fundamentals

    Trade Takeover Stocks With Merger Arbitrage

    This high-risk strategy attempts to profit from price discrepancies that arise during acquisitions.

You May Also Like

Hot Definitions
  1. Mixed Economic System

    An economic system that features characteristics of both capitalism and socialism.
  2. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  3. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  4. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  5. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center