Our Mergers & Acquisitions division provide advisory as well as business- broking services for companies. Acquisitions are an important element of the growth cycle of any business – we at DTC endeavour to understand the values and aspirations of our client. Our advisory services range from mergers to corporate finance, divestiture strategies and fund-raising. Whether you are looking to acquire, divest or raise capital to grow a business, DTC can provide knowledge and experience unparalleled in the industry, executing deals from beginning to end.
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What’s the Difference Between a Merger and an Acquisition?
Although they are often uttered in the same breath and used as though they were synonymous, the terms merger and acquisition mean slightly different things.
A merger occurs when two separate entities (usually of comparable size) combine forces to create a new, joint organization in which – theoretically – both are equal partners. For example, both Daimler-Benz and Chrysler ceased to exist when the two firms merged, and a new company, Daimler Chrysler, was created.
An acquisition refers to the purchase of one entity by another (usually, a smaller firm by a larger one). A new company does not emerge from an acquisition; rather, the acquired company, or target firm, is often consumed and ceases to exist, and its assets become part of the acquiring company. Acquisitions – sometimes called takeovers– generally carry a more negative connotation than mergers, especially if the target firm shows resistance to being bought. For this reason, many acquiring companies refer to an acquisition as a merger even when technically it is not.
Varieties of Mergers
From the perspective of business structures, there is a whole host of different mergers. Here are a few types, distinguished by the relationship between the two companies that are merging:
- Horizontal mergers- Two companies that are in direct competition and share the same product lines and markets.
- Vertical mergers- A customer and company or a supplier and company. Think of a cone supplier merging with an ice cream maker.
- Congeneric mergers- Two businesses that serve the same consumer base in different ways, such as a TV manufacturer and a cable company.
- Market-extension merger – Two companies that sell the same products in different markets.
- Product-extension merger – Two companies selling different but related products in the same market.