Mergers: When two companies, almost the same size, join hands and move forward as a single entity, we call it a merger. It is also called a Merger of Equals. The Board of Directors of both companies need to approve the merger. Shareholder approval is compulsory for such mergers. Mergers are adopted to save on production costs and enter new markets by accumulating enough capital.
Acquisition: When a company acquires a majority stake in another company, we call it an acquisition. The Acquired firm’s name or structure does not change. Through the acquisition, the companies can achieve larger growth instantly with increased market share. Investment Banking plays a significant role in easing Merger and Acquisition deals for Organizations.