A merger is when:
A) one firm buys controlling interest in another firm.
B) two firms agree to integrate their operations on a relatively coequal basis.
C) two firms combine to create a third separate entity that seeks to conduct one given function.
D) two firms agree to share certain information,but their operations remain independent.

Question

Quizplus · Accepted Answer

A merger refers to the combination of two or more companies, where the companies agree to integrate their operations on a relatively coequal basis. This involves both companies surrendering their original identities to create a new, combined entity. A merger is different from an acquisition, where one company buys controlling interest in another company. Choice A is an acquisition, choice C is a consolidation (where two or more companies combine to create a third separate entity that seeks to conduct one given function), and choice D is a strategic alliance (where two companies agree to share certain information but maintain their independence).

A Merger Is When