Merger and Acquisition

Mergers and acquisitions transactions are classified into either mergers or acquisitions. Many times, both these terms are used interchangeable. However, there is some legal difference between them, in terms of accounting procedures. Acquisition: According to Wall Street, when a big firm takes over another relatively smaller firm, and evidently becomes the new owner, then the purchase process is called an acquisition. In the process, the target firm stops to exist post-transaction and the acquiring company takes over the business. The stock of the acquiring company are traded continuously.

Merger:

Two firms, approximately of the same size come together to form a new company. This combination is known as a "merger of equals". In a merger, stocks of both companies are given up and at the same time, stocks of the new company are issued in its place.

Merger & Acquisition advisory services:

Merger & Acquisition advisory services are largely beneficial for the investment bank. Nowadays, there is a large potential for such types of transactions. Many individual or private firms' owners like to sell out their business for money and retirement. Also, a large public company aspires to purchase a competitor's firm through a stock swap.

In any case, merger and acquisitions advisors are generally from the investment banks' corporate finance department. In mergers and acquisitions, there no direct involvement of traders, salespersons or research analysts. However, research analysts can play an important role in making the merger successful.