when one company takes over another and establishes itself as the new owner the purchase is called an acquisition unfriendly or hostile takeover deals in which target companies do not wish to be purchased are always regarded as acquisitions however an acquisition can also be done with the willing participation of both companies 
on the other hand a merger describes two firms that join forces to move forward as a single new entity rather than remain separately owned and operated in general the two firms are of approximately the same size and this action is known as a merger of equals for example when daimler benz and chrysler merged the two separate companies ceased to exist instead the new company daimlerchrysler was created both companies stocks were surrendered and new company stock was issued in its place 1 in a brand refresh the company underwent another name and ticker change to the mercedes benz group ag mbg in february 2022 2a purchase deal will also be called a merger when both ceos agree that joining together is in the best interest of both of their companies a deal can be classified as a merger or an acquisition based on whether the acquisition is friendly or hostile and how it is announced in other words the difference lies in how the deal is communicated to the target company s board of directors employees and shareholders lara antal investopediam a deals generate sizable profits for the investment banking industry but not all mergers or acquisition deals close 3types of mergers and acquisitionsthe following are some common transactions that fall under the m a umbrella in a merger the boards of directors for two companies approve the combination and seek shareholders approval this type of m a activity is designed to boost both brands allowing each to bring their existing strengths to a new company and create a bigger piece of the industry pie for the new company that is formed for example in 2024 hbc announced that it was acquiring the neiman marcus group and merging it with another brand that it owned saks fifth avenue both nmg which owns neiman marcus and bergdorf goodman and saks are luxury retailers but their share of retail sales has declined with the rise of online shopping and the reduction of brick and mortar retail the merger will consolidate the three existing brands saks neiman marcus and bergdorf goodman into a single luxury retail brand known as saks global this consolidation is intended to make it easier to compete with online retail giants 4in a simple acquisition the acquiring company obtains the majority stake in the acquired firm which does not change its name or alter its organizational structure in some cases the target company may require the buyers to promise that the target business remains solvent for a period after acquisition through the use of a whitewash resolution an acquisition often allows the acquiring company to move into a new or related industry expanding its offerings by tapping into the acquired company s existing customer base and services an example of this type of transaction was amazon s acquisition of whole foods in 2017 the acquisition allowed amazon to expand into grocery delivery services groceries make up a large portion of many people s budgets as well as tap into the market for health conscious customers 5 whole foods which had been losing market share to customers who could find similar products at lower prices in other grocery chains benefitted from amazon s broad customer base and ease of connecting with consumers corporate consolidation happens when two or more companies combine to increase their market share and eliminate competition for example facebook consolidated its dominance in the social media industry by acquiring other social media companies that had promising business models and could have become competitive with facebook an example of this is when it acquired instagram in 2012 for 1 billion 6 instagram continued to operate as a separate company under the parent facebook company now meta platforms however other instances of consolidation under facebook resulted in acquired social media companies being integrated into the facebook platform for example the messaging service beluga was acquired by facebook then rebranded as facebook messenger 7in a tender offer one company offers to purchase the outstanding stock of the other firm at a specific price rather than the market price the acquiring company communicates the offer directly to the other company s shareholders bypassing the management and board of directors 8 for example in 2008 johnson johnson made a tender offer to acquire omrix biopharmaceuticals for 438 million 9 the company agreed to the tender offer and the deal was settled by the end of december 2008 10in an acquisition of assets one company directly acquires the assets of another company the company whose assets are being acquired must obtain approval from its shareholders the purchase of assets is typical during bankruptcy proceedings wherein other companies bid for various assets of the bankrupt company which is liquidated upon the final transfer of assets to the acquiring firms in a management acquisition also known as a management led buyout mbo a company s executives purchase a controlling stake in another company taking it private these former executives often partner with a financier or former corporate officers in an effort to help fund a transaction this type of m a transaction is typically financed disproportionately with debt and the majority of shareholders must approve it for example in 2022 tesla motors ceo elon musk purchased twitter inc for 44 billion taking the company private the deal included 25 5 billion of margin loan and debt financing 11