Whether you hope to expand your market share, extend your capabilities, or launch new products, combining forces with a competitor can be the best way to build your business. Business acquisition law provides two options for consolidating two companies: mergers and acquisitions. While many think these terms are interchangeable, there are important differences to consider before proceeding.

Mergers & Acquisitions Explained

What Is a Merger?

In a merger, two  companies combine to create a separate organization, with a distinct name and new management structure. After a merger, the new company will issue new stock and operate as a completely separate enterprise. However, it will still have to honor the debts and obligations of its constituent businesses. Mergers are the best course for two companies of similar size and economic power that will share resources and have complementary areas of expertise. For instance, a computer hardware company may choose to merge with a software developer to streamline operations and lower costs.

What Is an Acquisition?

Unlike mergers, an acquisition involves one company taking over the intellectual and physical assets of another. Business acquisition law is a complex field, and these transactions proceed several ways. Most involve a larger company purchasing a smaller firm. In many cases, the larger company may desires the intellectual property of a competitor, or need specialized skills and technology for a specific project. After an acquisition, the larger company retains their name and management structure, while the acquired business is resolved.

With a strong background in business acquisition law, the legal team at Zangari Cohn Cuthbertson Duhl & Grello P.C. have been serving companies throughout Connecticut, Rhode Island, and the rest of New England since 1946. They pride themselves on providing elegant legal solutions in a broad range of situations, from employment conflicts to compliance issues and mergers. Visit their website or call (203) 789-­0001 to discuss your business acquisition law issue, and follow their Facebook for more tips and advice.