Q. What’s the difference between mergers and acquisitions?
A. An acquisition usually involves either: The purchase of assets – The acquiring firm purchases certain of the selling company’s assets but does not purchase all the liabilities.
The purchase of all or a controlling portion of the acquired company’s stock – the acquiring firm buys the assets, liabilities and contracts of the selling company.
A merger is the result of the merging of two organizations, one being the buyer and one the seller.
Regardless of how the deal is structured, it is helpful for the buyer to determine the potential for known liabilities even if they remain the responsibility of the seller.