Foundations of Financial Management
16th Edition
ISBN: 9781259277160
Author: Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Publisher: McGraw-Hill Education
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Question
Chapter 20, Problem 2DQ
Summary Introduction
To explain: The difference between merger and consolidation.
Introduction:
Merger:
It is defined as a process of the statutory and contractual combination of two or more organizations when they agree to merge into one entity. In this process, the company taking over remains active while the other one becomes dormant and ceases all its operations.
Consolidation:
It is a process of the contractual combination of two or more organizations in which all the joining companies cease to exist and an entirely new entity is created, which is called the successor entity.
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