Mergers and Acquisition Law Service

Mergers
A merger occurs when two or more separate companies combine to form a single entity. The five common types of mergers are: conglomerate, horizontal, vertical, product extension, and market extension. A ‘merger of equals’ happens when two or more companies combine without a designated acquiring company. In this case, the new board reflects equal or nearly equal representation from each company, and stockholders of the original companies exchange their shares for shares in the newly formed entity. True mergers of equals are relatively rare. Often, one company is effectively acquiring another, but for reasons such as management considerations, employee integration, or marketing strategy, the transaction is presented as a merger rather than an acquisition.

Acquisitions
An acquisition is the purchase of one company (the target) by another company (the acquirer). This can occur through the acquisition of the target company’s stock or equity interests, or by purchasing all or a substantial portion of its assets.
Stock Purchases: In a stock acquisition, the acquirer buys the shares of the target company directly from its shareholders. As a result, the acquirer assumes all assets and liabilities of the target company. The legal complexity of a stock acquisition can vary, depending on factors such as the number of shareholders and the corporate structure of the target company.
Asset Purchases: In an asset acquisition, the acquirer purchases some or all of the target company’s assets, which may include equipment, vehicles, inventory, stock, or facilities. Unlike stock purchases, the acquirer can choose which assets—and which liabilities—to assume, offering greater flexibility and control. This selective approach is often considered a key advantage of asset purchases over stock acquisitions.
An experienced mergers and acquisitions lawyer can help you understand the advantages and disadvantages of stock vs. asset purchases.  

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