Merger & Acquisition

What is the difference between Merger & Acquisition? Is cash or equity a better way for paying for the same?

1 Answer(s)


A Merger is when companies of similar size combine together to become a single company.

An acquisition is when a larger company buys a smaller company to create a single large company.

For the acquiring company, equity is a better way to pay since they can conserve cash. But for the target company being acquires, cash is often better since they get immediately liquidity with no equity risk.