NSW, Sydney, 16 May, 2014-----Frequently the words merger and acquisition get used like these two words are just synonyms, but factually these consist of a lot of differences and implications. And the major difference lies in their financial model.

Along with acquisitions, mergers consist of involvement of too many companies who will be buying a part or an entire company. A mergers and acquisition can be defined as the consequence of two trading firms which often can be of the same size and necessity both of them need to be agreed to move and also exists as an individual company. Particularly this type of actions can be known as 'mergers of equals'. A stock swap is the one who will be financing the mergers. In some stock swaps, for both the companies the stock owners need to accept an equal stock measure in the association which is a new one formed. Both of the companies will be surrendering their stocks and as a mean of replacement this stock from the newly formed will be issued. And the entire thing will be managed by any individual section of administrative with their new union.

In contrast, to the above, when some companies, which needs to be a single number, taking over some other companies, the buyer will remain the sole proprietor for all. And this type of deal is better considered as 'acquisition'. If gone with the legal terms, the company who can be identified as the 'target company' ceases for their survival in the entire competition. The company then gets swallowed by its buyer and the stock of the buyer continues to stand with the completion of a trade. Acquisition is defined as two companies who need to be unequal and gets united to be one. The finance modem needs to involve a combination of debt and cash, stocks, only cash or the companies extra equity. The deal of the trade needs to be looked upon as 'merger' when the Chief Executive Officer of both the companies will be agreed in the unification which should be in their own interests. If the target company is not agreed to be sold, then occurs a takeover. Acquisition is the appropriate term for this.

Whether the result of the deal comes to mergers or it is the acquisition, essentially it depends on whether the entire system is friendly or it is just the opposite of being friendly and the friendliness also depends on the ways with which it will be announced. Or otherwise, it can be said that the primary difference among the two is the way of the purchase which has been communicated and also got received from its other end by the board of directors of the target company, their employees and shareholders.

Such is a concept of Mergers and Acquisitions. So if you are some company owners then first decide on what procedure you want to take up and if possible always consult with your other men whom you consider as important and value their feedback regarding the same.

Kreston Dormers are professional taxation, Business consulting, financial professional services provider in Sydney.Click here, or followed on : google+

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