Mergers and acquisitions

In business, mergers and acquisitions (M&A) are transactions where the ownership of a company, business organization, or one of their operating units is transferred to or consolidated with another entity. They may happen through direct absorption, a merger, a tender offer or a hostile takeover. As a central aspect of corporate strategy and strategic management, M&A activity enables companies to expand, diversify, restructure, or realign their competitive position.

In legal terms, a merger is the consolidation of two entities into a single legal entity, whereas an acquisition occurs when one entity takes ownership of another entity's share capital, equity interests or assets. In practice, however, the distinction is often blurred. Both forms typically result in the combination of assets, liabilities, and operations under unified control, and transactions described as mergers may economically resemble acquisitions, and vice versa.

M&A transactions are governed by corporate law and are typically subject to regulatory review, particularly under competition (antitrust) law. Many countries require notification and review of proposed mergers to allow the government to assess their potential effects on market competition. In the United States, for example, the Clayton Act prohibits any merger or acquisition that may "substantially lessen competition" or "tend to create a monopoly", and the Hart–Scott–Rodino Act requires providing advance notice to the U.S. Department of Justice and the Federal Trade Commission of any merger or acquisition over a certain size.