A merger is an agreement that unites two existing companies into one new company. There are several types of mergers and also several reasons why companies complete mergers. Mergers and acquisitions are commonly done to expand a company's reach, expand into new segments, or gain market share.

What does it mean when companies merge?

Mergers combine two separate businesses into a single new legal entity. ... Unlike mergers, acquisitions do not result in the formation of a new company. Instead, the purchased company gets fully absorbed by the acquiring company. Sometimes this means the acquired company gets liquidated.

What is merger example?

Mergers combine two companies into one surviving company. Consolidations combine several companies into a new, larger organization. For instance, if Company ABC and Company XYC were to consolidate, they might create Company MNO.