A merger describes the joining of two independent companies, while an acquisition describes the purchase or takeover of a firm.
When two organizations come together to form a wholly new entity, it is called a merger. The two prior organizations are dissolved, and each party owns a portion of the new business. It is given a new management structure and runs like a whole different business.
Acquisitions are typically less friendly than mergers. The deal benefits both parties equally, and they both agree to combine forces.
Due to the common extreme power imbalance, acquisitions are more aggressive than mergers. The fact that two businesses with roughly equal status rarely agree to merge makes them more common. Acquisitions are frequently referred to as mergers just to avoid a negative connotation.
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