The Basics Of Mergers And Acquisitions

Mergers and acquisitions (M&A) and corporate restructuring are a big part of the corporate finance world. Wall Street investment bankers routinely arrange M&A transactions, bringing separate companies together to form larger ones. A merger is a combination of two companies, an acquisition is where one company buys another.

These actions often make the news. Deals can be worth billions of dollars. They can dictate the fortunes of the companies involved for years to come. For a CEO, leading an M&A can represent the highlight of a whole career.

What does a big merger or an acquisition mean to investors in the companies involved in the deal? This tutorial discusses the forces that drive companies to buy or merge with others, or to split-off or sell parts of their own businesses.

We will also look at the tax consequences for companies as this is often a prime motivation for doing these deals.