Business and Personal Finance Dictionary

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• MERGER
  
  Two or more independent companies can consolidate or pool their businesses in a number of different ways. These consolidations are often described as mergers, partly to distinguish them from acquisitions in which one company purchases, or takes over, the assets of another. Technically, a merger occurs when two or more companies pool their interests, exchange their common stock, and one of them survives and continues to function. A merger is typically a tax-free transaction-meaning that shareholders owe no taxes on the stock that is pooled or merged, while an acquisition usually means that the owners or stockholders of the acquired company realize capital gains for the sale of their stock. Despite their differences, mergers and acquisitions are invariably linked together, often simply described as M&A.
  
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