Amalgamation vs. Acquisition
Basis of Distinction |
Amalgamation |
Acquisition |
---|---|---|
Definition |
The joining or merging of two or more businesses to create a new organization that often leads to the original businesses’ collapse is known as Amalgamation. | The process by which one business acquires another, with the acquired business either becoming part of the acquiring business or continuing to operate separately. |
Formation of a New Entity |
It results in the combination of the assets and liabilities of the merging corporations to form a whole new company. | The purchasing firm doesn’t change, and the acquired company might or might not remain a distinct business. |
Legal Structure |
It often entails the creation of a new legal corporation, sometimes with a name and structure distinct from the founding businesses. | It does not often need the formation of a new legal organization since the acquiring firm keeps its existing legal framework. |
Consolidation of Ownership |
It entails combining ownership stakes from many different companies to create a new ownership structure. | It results in the ownership and control of the acquired firm passing to the purchasing company. |
Decision-Making Power |
There is joint decision-making authority in the resulting entity between the merging entities. | The purchasing corporation continues to have the majority of decision-making authority. |
Purpose |
It often sought to combine complementary qualities, create synergies, or reap mutual advantages. | It is usually sought for tactical objectives including acquiring market share, getting access to new technology, or destroying rivals. |
Degree of Complexity |
It may be more complicated since it involves the formation of a new legal organization and requires consent from the parties merging. | Given that one corporation is assuming ownership of another, it could be less complicated. |
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