What is the difference between a merger vs. an acquisition?

Reasons for mergers include

• Both companies want to merge to expand their reach in new markets

• Both companies want to reduce operational costs

• Both companies want to improve their profit generation

Mergers are considered more agreeable in business because both companies participating have a chance to benefit from the new venture.

In an acquisition, more powerful, influential, and better-funded companies often acquire lesser companies. Acquisitions may occur to eradicate competition in a particular area, or simply because the company wants to expand its product offerings.

Other reasons for acquisitions include:

• Eliminating the expenses from buying from a supplier by acquiring that supplier

• Lowering operational costs of the acquiring company

• Acquiring important assets that would require large amounts of time and development to implement if an acquisition did not take place

Acquisitions are considered more hostile in the business world. Acquisitions can sometimes be referred to as mergers to avoid the negative connotation that comes with the term acquisition, however, when this is done it is not an accurate representation.