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What is a merger ?

  When one company wants to merge or join forces with another, what exactly does that mean? And when mergers happen for publicly traded companies, what happens to their stocks?


 A lot happens when a merger or acquisition occurs, including some employees getting let go, certain divisions being made redundant, or even grander restructuring of business assets. Mergers of companies can be uncertain events, but generally they end up being beneficial for the resulting single company. So why would a merger happen when one company and another company see each other as mutually beneficial? They can both engage in merger talks to form a united company working together with both of their assets under a similar or new name as a new entity. When one company is significantly larger than the other, generally this becomes an acquisition where the larger company offers to buy the smaller company. 


When a merger occurs, both companies become a new company together. The stocks of both companies merge into the new stock and are reissued for acquisitions the smaller company's stock or the one being bought stops being traded and stock owners receive a number of shares for the larger company based on the terms of the acquisition deal, generally in line with fair value. According to the acquisition. In mergers, leadership from both companies generally comes together to make decisions. However, in acquisitions the larger companies culture and workflows generally take priority and the acquired company will eventually need to fall in line with their new companies workflows, mergers and acquisitions can be uncertain for employees of the acquired company or the merging companies as it generally means changes to how you work and possibly even your employment when a new company is bought out. For example, the new company may not need the bought out companies, HR Division or other staff that don't fit into the new business model. Outside of employees of the companies themselves though for stockholders and investors, mergers and acquisitions are generally a good thing and can result in rising stock prices or quick returns on initial investment.


 

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