Merger: Merger or consolidation: one firm being absorbed by another.

The
acquiring firm retains its name and identity, and it acquires all of the assets and
liabilities of the acquired firm. After a merger, the acquired firm ceases to exist
as a separate business entity. In a consolidation, an entirely new firm is created,
so the two original firms terminate their previous legal existence.
Acquisition of shares: one firm purchases the another firm’s voting shares in
exchange for
cash, or shares of equity and other securities.
• Acquisition of assets: one firm buys all the assets of another firm
Acquisition of shares: one firm purchases the another firm’s voting shares in
exchange for
cash, or shares of equity and other securities.
• Acquisition of assets: one firm buys all the assets of another firm
Acquisition of shares: one firm purchases the another firm’s voting shares in
exchange for
cash, or shares of equity and other securities.
• Acquisition of assets: one firm buys all the assets of another firm
Acquisition of shares: one firm purchases the another firm’s voting shares in
exchange for
cash, or shares of equity and other securities.
• Acquisition of assets: one firm buys all the assets of another firm
Acquisition of shares: one firm purchases the another firm’s voting shares in
exchange for cash, or shares of equity and other securities.•
Acquisition of assets: one firm buys all the assets of another firm

Exchange Ratio : In mergers and acquisitions (M&A), the exchange ratio

measures the number of shares the acquiring company has to issue for each
individual share of the target firm.

Formula
Exchange Ratio = Offer Price for Target’s Shares / Acquirer’s Share Price
Exchange Ratio example
Assume Firm A is the acquirer and Firm B is the target firm. Firm B has 10,000
outstanding shares and is trading at a current price of 17.30 and Firm A is
willing to pay a 25% takeover premium. This means the Offer Price for Firm B
is 21.63. Firm A is currently trading at 11.75 per share.
To calculate the exchange ratio, we take the offer price of 21.63 and divide it by
Firm A’s share price of 11.75.
The result is 1.84. This means Firm A has to issue 1.84 of its own shares for
every 1 share of the Target it plans to acquire.

Synergy Benefits: Synergy is the concept that the value and performance of

two companies combined will be greater than the sum of the separate individual
parts. If two companies can merge to create greater efficiency or scale, the
result is what is sometimes referred to as a synergy merge.
The expected synergy achieved through a merger can be attributed to various
factors, such as increased revenues, combined talent and technology, and cost
reduction.
In addition to merging with another company, a company can also create
synergy by combining products or markets, such as when one company cross-
sells another company's products to increase revenues.
Companies can also achieve synergy between different departments by setting
up cross-disciplinary workgroups in which teams work cooperatively to
increase productivity and innovation.